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Why is Supplier Performance management important?

February 22, 2022 | Divya Khare

Blog / Why is Supplier Performance management important?

Understanding Supplier management

The act of locating, obtaining, and managing resources and suppliers that are critical to an organization’s operations is referred to as supply management. In other words, this is referred to as the Supplier Management Process. Supply Management entails the acquisition of physical goods, data, services, and any other necessary resources that enable an organization to operate and grow indefinitely. Supplier management is the relationship that is formed between a buyer and a supplier in exchange for goods or services being obtained and supplied into your organization, which defines the type of working relationship that you should seek to develop with your suppliers. Supplier relationship management is a fundamental soft skill for all purchasing and supply managers. 

Why is Supplier management important?

As supply chains have evolved into global networks of networks, supplier management processes have become more complex, time-consuming, and expensive. A heavy reliance on manual, paper-based processes, as well as double entry of digital events and form filling, has exacerbated these issues, slowing execution, allowing for human error, and impeding agility.

Supply chain leaders have increased their commitment to digitizing and modernizing supplier management processes in response to these challenges. Among the numerous advantages are improved supplier verification, improved onboarding, and stronger lifecycle tracking. As a result, supply chain relationship management is more effective.

Supplier Management, a future need

To improve data quality, ensure information immediacy, and optimize processes, supplier management will continue to rely on digitization, trust, transparency, and intelligence.

  • Create new value by collaborating with ecosystem members to develop new capabilities. These capabilities are not only beneficial to strategic and operational performance, but they can also be commercialized.
  • As AI continues to self-learn and build knowledge with more data, it will become even smarter. Organizations can then confidently apply AI to extend human capabilities and automatically initiate recovery processes to mitigate impacts to the business and customers after honing the ability to pinpoint recommendations and next-best actions for each unique supply chain and supplier relationship.
  • Extend even further to include more participants in B2B transactional processes, allowing carriers to be active participants in resolving delivery disruptions and certifiers and other partners to validate suppliers’ financial and legal status more quickly.

Need for Supplier assessment

  • Supplier rating helps to minimize subjectivity in judgment and make it possible to consider all relevant criteria in assessing suppliers by providing feedback from all areas in one package.
  • Few important factors for Supplier Rating include competitive pricing, price stability, price accuracy and much more. Competitive pricing lets you understand the basic comparable price of the similar products with different vendors and lets you choose the right supplier.

In today’s fast-paced and competitive marketplace, effective supplier relationship management can increase efficiency. With automation, you can eliminate much of the ineffective administrative effort required to manage suppliers, reduce the risk of errors, increase communication, control, allow for categorization, ensure tasks are performed consistently, resolve issues quickly, and increase visibility, which will facilitate sourcing and other aspects of the process. It’s as simple as that: the higher your organizational efficiency, the better you can run your business.

The ultimate goal of procurement is to get the most bang for your buck from your suppliers. That is exactly what you will get through structured, strong supplier relationship management. The intelligence provided by automation, in particular, will enable you to gain insights that will enable you to make the best decisions that will provide the most value.

Furthermore, if you have good relationships with your suppliers, it is possible that they will prioritize you. They’ll go to bat for you, make exceptions for you, and do everything they can to meet your quote, deliver your goods on time, provide the top quality you require, and provide the support you require.

Pluto7 is taking a lead in solving Supply Chain problems, Supplier Management is one of them. We have a team of experts that have deep expertise in the subject and can help understand your problems to its core. 

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