Supplier Relationship Management: Benefits & Importance

supplier management

As supply chains become more complex, the drive to lower prices means that margins are less. Businesses are shifting to supplier relationship management (SRM) as a structured and systematic method for procuring the goods and services they require to preserve profitability and achieve success.

In fact, numerous companies of all sizes in various sectors have already embraced SRM solutions as a way to improve output quality, reduce supplier costs, and gain other advantages. We’ll talk about the importance and benefits of a supplier relationship management solution to help clear things up a bit.

Photo by Medienstürmer on Unsplash 

SRM Importance

Purchasing plays a critical role in keeping a business alive by generating a profit and reducing costs. On the other hand, if supplier relationships are damaged, both sides risk losing a significant amount of time and money. As a result, developing and sustaining effective supplier relationships will add substantial value to the entire company.

Supplier relationship management concerns assisting in the development of strong buyer-supplier relationships and determining which activities to pursue with each supplier. SRM simplifies and streamlines operations between a buyer and their suppliers. It focuses on establishing a mutually beneficial relationship with suppliers, particularly those considered the most vital to the brand, to increase quality and innovation.

SRM Benefits

There are multiple reasons why many businesses today use supplier relationship management solutions. For brevity, we’ve only mentioned three. 

1. Procurement Optimization

Even the most sophisticated of processes have room for improvement. A healthy supplier relationship facilitates the exchange of ideas and feedback, utilized to streamline operations and easier and faster access to markets. This will eventually induce diminishing expenses. The fact is forming strategic alliances with primary suppliers benefits both buyers and suppliers.

2. Cost Reduction

In most cases, there are massive costs associated with establishing new supplier relationships, but a supplier relationship management solution can eliminate the majority of them. A company can manage long-term cost savings by forming a productive relationship with important suppliers. Strong supplier relationships will not only save money but will also eliminate availability and quality issues.

3. High Efficiency

A healthy supplier relationship will provide fertile ground for profitable communication. As the supplier learns more about your business, they can improve the quality of the service they provide. Order problems are less likely, and if they occur, the strong relationship between the two sides will make it easier to resolve them.

Bottom Line

Your relationship with suppliers plays a vital role in the free flow of ideas and feedback. In time, the relationship can help you develop a solid supply chain that will drive profits, improve customer service, and reduce costs. 

Instead of handling all relationships separately, you can opt for Penny to manage them all in one place. Please contact us, and let’s work together to find a solution in line with your exact needs.

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Frequently Asked Questions

Penny is a cloud-based Procure-To-Pay system. penny helps you digitize and manage your full procurement cycle from request to approval. Manage RFQs to vendors, compare quotations, send POs and even payment. penny was designed to make things easy and consolidate all of your organization’s spending needs into one intelligent system.

  • Allocate, manage and monitor budgets by expense accounts, projects, departments, location, teams..etc 
  • Streamlining procurement means requests, approvals, and POs won’t be lost in emails or offline.  
  • History and records of requests and purchases can be extracted and tracked easily via the platform. 
  • Product requests are more accurate through the catalog, and hence avoid purchasing mistakes.
  • Reports and analysis can be extracted from the platform, giving you a consolidated data center for all your procurement activities.
  • penny is cloud-based and an easy to use platform. The action-board gives your team a user-friendly and simple experience.

Yes, penny is designed to handle complex procurement operations. We make EVERYTHING simple. Via the contract management feature, you can set the terms and conditions of your contract, and the system will recognize the products and the vendors of your request and match it with specified terms of your contract. Easy.

Putting you in control of your spending is integral to our mission. penny allows you to create Expense Accounts that match your P&L, and assign budgets to them. For example, you can assign $X for your “Travel Budget” and reflect on the budget before approving a travel request. In addition, penny allows you to set budgets for cost centers like projects, departments, locations, and so much more. With penny, you can extract reports and view your spend per Expense Accounts or cost center.

Yes. If your product search finds no results, you can submit a non-standard request.

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