In the previous blog we spoke about why supplier management is gaining focus.
In this blog we will discuss the driving forces behind supplier management technology implementation. The reason for this could be internal organizational factors or external factors.
Internal forces
- Management mandate
When a mandate has been passed by the organization’s top management, all the current processes are revised to accommodate the change.
- Increasing scale of operation – thus need for new or more suppliers
An increase in scale of organization’s manufacturing operation results in higher demand for the raw material input. This would mean expanding supplier base, from local to global.
- Supplier data management
For any organization, data is of utmost importance. However, data or information if not managed well serves nothing but confusion. Organizations should have supplier data well organized and centrally accessible.
Manual ways or using homegrown tools may result in inefficiency when it comes to managing incumbent as well as new suppliers with regards to supplier evaluation, supplier payment etc. While onboarding new suppliers, there are series of official papers that need to be collected and quality checks that need to be done. Verifying such information manually poses problem to the organizations not using a good supplier management tool.
Also, not all the supplier data are meant for every employee in the organization. Some of them are confidential and need to have access control. This is not possible if the supplier information is managed manually.
- Building sustainable supplier relation
No tools can replace the human element required for building good relations. However, technology can help identify key suppliers with whom the procurement executives can engage in not just negotiation over cost and quality but also partner for innovative ideas. Supplier management tools also help organizations engineer supplier development programs that make suppliers feel valued.
In the next blog we will discuss the external factors impacting the decision for implementing supplier management.
Learn More: Vendor Management
