Using Technology To Streamline Supplier Management
Suppliers are the most essential components of running a successful procurement department. Procurement, sourcing, contracting, manufacturing, and delivery all depend on suppliers to function properly. Without a solid, reputable base of suppliers businesses will falter. It’s like going through life without a term life insurance policy. It’s a bad idea! That’s why it’s so essential to understand the best methods for managing, acquiring, and contracting with suppliers in order to ensure your business is able to continue operating. Technology offers a unique means by which managing and maintaining supplier relationships can be readily accomplished. Here are a few ways that technology can help your organization with its own supplier management.
Understanding Current Pain Points
It’s impossible to fix any issues at all until you can readily identify your common pain points. A pain point can be defined as any problem that might interfere with the company’s ability to grow and thrive. Being able to identify pain points is only part of the process. It’s understanding them where light is truly shed on a better path forward for the business. When an organization understands where it’s struggling and can readily define it’s operational concerns, it’s easier to develop and forge a path forward that will eventually result in success. But it all starts with identification and a unique understanding of the pain points involved in running your business whether it’s suppliers, in-house requisition procedures, or planning out a guided buying experience for your employees. Technology works to put all of these variables in one place to allow you to leverage them to suit your business needs.
Supplier Selection Process
Selecting the suppliers can be tricky. Businesses need to find suppliers that have a strong reputation, have the potential to grow with the business, and will fulfill their end of the contract process. Realizing negotiated benefits from your suppliers should be easier than it actually is in practice. Suppliers should have the capacity to handle your business needs, be able to accommodate your organization, and be clear with their communication. Defining the criteria for the selection process and what you’re looking for through a cloud-based software suite can help you efficiently assess and onboard your suppliers without much trouble. Better yet, it enables smoother communication and interaction with them to ensure company compliance, adherence to the contract, and high performance. Finding ways to get suppliers on board with your policies and procedures is just part of supplier selection, and vetting them is simpler with technology on your side.
Managing supplier interactions can be very time consuming and tedious. Between phone calls, emails, and instant messages it can seem like a lot of exchanges are happening without much actually getting done. Luckily, automation puts an end to that non-stop deluge of ineffective communication by using automated data. With supplier management software, setting parameters for flagging or blocking invoices when data is missing means you spend less time chasing suppliers when you need accurate, up to date data for your invoices. This means teams can focus on other pertinent aspects of the business while suppliers and protocol are being handled appropriately.
Fraud Detection Methods
Fraud. It’s a pretty scary word sometimes. Supplier fraud is a strange concept. In this scenario, it means that a case where suppliers might falsify information on an invoice or send fraudulent invoices to the accounts payable department. Watching out for changes to personal details and suspicious behavior from suppliers is part of due diligence for detecting fraud. Setting software parameters to check for regular changes in information, surprisingly large payments, or any other potential fraudulent details will help you detect these problems fast. Using software to send payment confirmations and verify details can also go a long way to attenuate fraud, making it one of your best bets for preventing these types of problems caused by suppliers at your organization.
Spend Visibility And Third-Party Risk
Going hand in hand with fraud prevention, having a high threshold of spend visibility and being able to understand/assess third party risk are equally important. Third party risk can manifest itself in myriad ways. That’s why keeping tabs on invoices, supplier behavior, and seeing where money is going are all equally important. Through the use of guided buying protocols, reinforcing compliance standards for the company regarding internal and external spend, proper expense report accounting, and automating certain AP department processes, technology can prove to be a tremendous Ally in spend analysis and risk mitigation procedures.