Relationships are key to building enduring supply chains and driving value, explains David Steyn, Customer Engagement Business Manager at Decision Inc.
The supply chain has changed. Digital transformation has shifted the ways in which companies and individuals engage along the supply chain across information shared, access to systems, and integrated experiences. As a recent Harvard Business Review article points out, ‘companies need to change the way they forge and manage relationships with other entities in the supply chain to facilitate new types of alliances and agreements.’ It is relationships that will add value to the chain, that will provide stability in uncertainty, and that will ensure organisations have the tools they need to retain customers and build sustainable businesses.
In the past, customer relationship management (CRM), enterprise relationship management (ERM), and supplier relationship management (SRM) have not had equal weighting. CRM has, by market demand and default, seen the most investment, with SRM and ERM taking what’s left of the share. Now, due to lessons learned during the pandemic and a drive towards a more balanced approach to ecosystems and the value chain, the three need to be more evenly balanced to ensure companies can compete more effectively on every front.
Reassessing supplier management
While ERM – providing better support for employees and building environments that curate and uplift talent – has seen an obvious change thanks to the Great Resignation and the skills gap, SRM is equally important. It has become critical for companies to invest in how they approach supply chain management and to reassess how they engage with suppliers to minimise disruptions and improve overall service delivery.
The era of relationships has begun, and in the supply chain, this means treating suppliers like partners in the business, not as a source of tension or a complicated business process. This means addressing legacy challenges within the supply chain and making supplier management part of the overall business strategy.
Challenges of the supplier relationship
One of the most common challenges faced by suppliers and organisations alike is onboarding processes. Larger companies tend to put suppliers through a very tedious and complex onboarding process – to respond to a tender a supplier must be on a database, getting onto the database can take months, and the paperwork is long, tedious, and complicated. This can alienate great suppliers by rewarding only the tenacious and can cause friction in the relationship before it’s even started. For the business, the onboarding process is designed this way to eliminate risk but often deteriorates into bottlenecks, credential chasing, and manual vetting.
Ironically, it’s these manual processes that will expose the organisation to unnecessary risk. People make the calls, do the paperwork, and log the entries often circumventing processes in response to urgency and a supplier can slip past those very controls put in place to minimise risk. Then there is the added challenge of limited supplier visibility across different silos and piles of paperwork. How can the organisation fully realise the potential of an exceptional supplier if their data and feedback are not in a digitised system that offers immediate visibility into performance? This has a knock-on effect on both the supplier and organisation.
The solution is digital platforms
Organisations need data. Data that can provide them with visibility into supplier performance, and that can ensure the company always engages with the right suppliers. They also need digital solutions. It is digital solutions that ensures the onboarding process isn’t tedious and time-consuming and that all the relevant information is captured accurately within a central space that allows for procurement to make informed decisions. And that will make it far less arduous for suppliers – they also lack visibility into the procurement process and often this tarnishes the relationship and the experience on both sides. They feel that they’ve submitted a mountain of paperwork into a black hole and that’s not a great way to start a long-term relationship.
Moving forward, companies need to find a balance between the demands of procurement and building robust supplier relationships. This means smoothing over ineffective processes like the onboarding process, investing in digital platforms that provide visibility on both sides, and that makes suppliers feel less like support staff and more like service providers and partners. If the business can centralise and digitise its supplier management function, then it can redefine how relationships are built and create a more robust and engaged value chain. This will not only benefit the business in terms of growth and stability but will embed trust and shared expectations throughout the supply chain.
Find out more about our Supplier Management Solution to get started on your digital journey today.