Just like in any long-term relationship, communication is the key when it comes to nurturing supplier relationships.
Get it right and suppliers become an extension of your business. Get it wrong and ineffective communication can have the opposite effect, impacting business performance and leaving you unable to fulfil your customers’ requirements.
Supplier communication has become increasingly complex over the years as customer demand for increased responsiveness, pressure on price and margins, and the globalisation of supply chains have all contributed to a challenging business environment. To meet these challenges, many companies have reacted by making positive improvements to the way they connect, monitor and communicate with their suppliers.
E-sourcing software can be used as an effective supplier communication tool, whether it be direct to one supplier or as a broadcast communication to multiple suppliers within your supply base. It also helps centralise information and ensure auditability of the sourcing process – communication is vital to effective express your requirements and allow the supplier to respond – creating as much interaction between procurement professionals and their potential suppliers as possible.
E-sourcing platforms provide tangible benefits to both sides of the relationship. Submitting responses to tenders can be a labour intensive process and ultimately a barrier for some organisations. E-sourcing resolves this issue for SMEs in particular as they can engage far more easily in the supplier selection process by simply responding to a pre-qualification questionnaire. The online supplier portal provides easy access for suppliers to register and participate in events, with regular alerts, communication and actions all visible and traceable for auditing purposes.
When communicating with a number of suppliers, it is important information is delivered in a structured way. Using e-sourcing to automate the tender process means all suppliers receive information at the same time, in the same format and in compliance with highly regulated procurement processes, such as EU regulations.
Having identified preferred suppliers through e-sourcing, businesses are increasingly building supplier relationships that are about much more than just negotiation. By removing labour-intensive paper work, e-sourcing also enables buyers to free up time to focus on relationships with their key suppliers. The platform then also works to manage those suppliers that are used infrequently.
Highly collaborative supplier relationships don’t just happen by accident, they emerge through effective, regular communication. By standardising channels of communication with suppliers through electronic engagement, it can greatly diminish many of the complexities that come with managing today’s global supply chains.
In the next blog in this series we look at how e-sourcing software helps organisations collaborate more effectively on procurement.
Alun Morris is senior e-sourcing consultant at Wax Digital