As businesses are starting to realize, suppliers are an essential part of success. Without the right materials being delivered in a timely fashion, a manufacturing plant can literally come to a complete halt. Without reliable shipping agents, none of the created goods can reach their destination on time and in good condition. As more businesses are recognizing the importance vendors play in their success, they are also beginning to implement more strategies for helping them deal with sellers in ways that make the relationships mutually beneficial. These approaches have come to be known collectively as supplier relationship management.
Usually done with the assistance of software, supplier relationship management can have a number of benefits for both parties. For buyers, they gain a reliable source of the goods they need at a reasonable price and with dependable results. They also don't have to look for a new vendor each time they want to buy those goods. For sellers, they receive a steady source of business and revenue. While these benefits may already sound impressive, they are merely the beginning of the possible benefits an organization can realize. Further collaboration between suppliers and buyers can bring even more advanced benefits, such as constantly monitored inventories and real time information.
All of these benefits are only possible, however, when the buyer has taken the time to successfully implement SRM software and has planned how the program can work to make the relationship better for both groups. There are a number of important steps to this process.
First, businesses really need to be technologically prepared. Most companies that successfully adopt SRM systems have also taken the plunge into ERPs and SCM as well. These other systems help organize and prepare the data in advance that the SRM software will need to function to its full potential. Without an ERP in place, the SRM will have to rely on spreadsheets or other legacy systems in order to function and this requires more time and preparation and often delivers less satisfactory results.
A second step is connecting the suppliers to the system. Suppliers must be able to interact with the SRM software in real-time if both parties are to use the system to their advantage. Vendors can use the software to check inventory supplies and can reorder goods when it is apparent that the levels require it. This eliminates one less thing a buyer has to monitor. Additionally, real-time data transfer means that orders can be placed much faster. For example, one company actually reduced the transaction time of order placement from an average of thirty minutes down to five in a relatively short period of time.
Finally, buyers must have an attitude that is open to collaboration. Many companies still view vendors as simply another resource, and they don't take their needs seriously. Suppliers want to feel secure in their relationship with buyers, but they also don't want to become involved in one-sided deals. Buyers must be willing to consider how a strategy will benefit both parties in the collaboration, and they need to be able to clearly express those benefits.
SRM, once put into practice, can definitely be an asset to companies, especially those who are trying to cut down costs. Using SRM software, some businesses have been able to reduce expenses by almost a quarter. This has obviously had a significant impact on the company's bottom line. Because excess inventory does not need to be kept on hand and because orders only need to be placed when the demand arises, businesses have been able to increase their profit margins and to be more competitive in the market.
For most companies, all of these benefits can be achieved simply by creating stronger supplier/buyer relationships. Using software and implementing it into an existing ERP system, businesses are able to give vendors real-time access to important data that helps both parties accomplish their tasks in a more efficient manner. When vendors and buyers work together, the results can be impressive, particularly if they plan in advance for success.