Supplier management is a complex, multi-step process that’s a fundamental aspect of an organisation’s success. However, despite its importance, it remains a highly manual process for so many businesses — which can lead to a slew of inefficiencies that affect every stage of the procure-to-pay (P2P) lifecycle. Luckily, there is an easier way to do things.
Supplier Management Impacts Your Business
Never before has business resilience and continuity been so vital for organisations to incorporate into every single process, and supplier management is no exception.
There is an inherent value to supplier relationships. The relationships built with your suppliers can benefit your organisation in many ways. Collaborating with suppliers and involving them in the supplier management process helps build longer-lasting, trust-based relationships that can be leveraged in the future. Not surprisingly, a recent survey found that 58% of finance professionals interviewed said their supplier relationships were more strategically important than a year ago, with 74% reporting that suppliers are essential to their continued growth. The importance of supplier relationships is likely to keep growing; as organisations focus on moving their businesses forward and preventing future supply chain vulnerability.
How it Affects Supply Chains
Risk: When you’re entrusted with financial and business data as AP teams are, manually managing sensitive information via paper, emails and phone calls drastically increases risk, as no chain of custody or audit trails can be tracked.
Compliance: Manual supplier management makes it difficult to monitor and regulate purchasing channels and ensure compliance with e-invoicing policies.
Visibility: Without full transparency into supplier invoices and payments, tracking down who did what on each supplier account is a cumbersome task that can easily lead to slow processing times and other delays that can negatively impact supply chains.
How it Affects Cashflow
Cashflow visibility: Manual supplier management doesn’t lend itself well to tracking cash activities, making it much harder to get an accurate read on your cash position. Poor cashflow visibility can ultimately lead to less optimal payment terms and cash on hand.
Supplier communication: Strengthening supplier relationships is virtually impossible without having open, ongoing communication. Without automation, communication with suppliers must be done via email and phone calls, which only creates more inefficiencies. A lack of collaboration with suppliers will only weaken your negotiating position come contract renewal time.
Automation: The Key to Business Continuity and Resistance
Automation delivers efficiencies that bolster bottom lines and helps prevent doing business with the wrong partner. Supplier management solutions help businesses evaluate and monitor suppliers and their associated risks before even engaging with them.
Accounts payable plays a critical role in supplier relationships. Closely managing supplier relationships and ensuring suppliers are getting paid have always been crucial to preserving the integrity of supply chains and limiting disruption. And now, bolstering supply chains and supplier relationships have moved straight to the forefront of AP priorities. It can be unnerving when supply chains are disrupted by forces outside of a business’s control, and the ability to keep supply chains open is vital for business continuity. Being able to fall back on quality, long-lasting vendor relationships is a sound way to contain the ramifications of those disruptions.
Contact us to learn more!
-Written by, Hannah Hoffmann