Spend Matters welcomes another guest post from Shannon Lowe and Mark Schaffner of Verian.
Many organizations aspire to get better value from suppliers by reducing transaction costs to achieve savings. However, for a lot of companies, streamlining supplier communications is much easier said than done. More often than not, the breakdown is in the areas of order placement, payment and dispute resolution, all critical processes when creating more collaborative and efficient relationships with key suppliers.
Fortunately, supplier network technology available within most leading eProcurement systems can provide an environment that makes networking and communicating with suppliers much less complicated. Here’s a look at six ways supplier networks dramatically simplify supplier communications:
1. Streamlined Data Entry
Automated supplier networks minimize labor, time and other expenses by providing a software infrastructure that connects to suppliers electronically, allowing more efficient real-time management of catalogs, POs, invoicing and all of the other required AP components without re-keying data.
2. Reduced Purchasing Cycle Times
Once suppliers are enabled electronically, placing and receiving orders gets much faster. Buyers can quickly complete orders using common electronic protocols like EDI and cXML, not to mention simple emails and faxes. Suppliers then simply sign in to the network to receive, review, and acknowledge POs, as well as respond to RFQs.
3. Easier Catalog Content Management
Managing supplier catalogs is one of the most challenging aspects of SRM. Supplier networks automate catalog management, so this once-harrowing task becomes as easy as suppliers uploading catalog content and prices for buyers to review and approve. Catalog and pricing updates happen just as swiftly and can even be loaded with future effective dates.
4. Contract Pricing Compliance
Organizations only realize sourcing savings when purchases are kept in line with supplier negotiated contracts. This can be especially hard to control in our economy where large companies routinely conduct operations from many locations. Electronic supplier network and enablement systems enforce compliance with supplier contracts by promoting preferences in accordance with pre-loaded supplier agreements and limiting options outside the network.
5. Reduced Payment Cycle Times
Automated supplier networks dramatically reduce payment cycle times because all suppliers have to do in response to electronic orders is just load an invoice file, or simply “flip” an incoming PO into an invoice, and immediately transmit it back to the customer. Suppliers can even check payment status online, which results in a lot fewer payment-related calls into AP.
6. Better Visibility and Focus on Relationships
Enabling suppliers electronically and utilizing supplier network technology to streamline and manage day-to-day interactions with suppliers improves visibility into suppliers at every touch point. It also allows organizations to focus more on creating beneficial leverage in their supplier relationships.
Supplier networks can be a very effective solution for companies looking to ease the burden of SRM and make relationships with their suppliers more successful.