303-478-5763 info@oappsnet.com
How To Turn Supplier Management Into A Competitive Advantage

How To Turn Supplier Management Into A Competitive Advantage

Wondering how you can get the most out of your supplier management? Then keep reading this post as we discuss supplier management and how to get the most out of it.

You must partner with a reliable and trustworthy supplier as a business owner. This can hugely impact the growth of your business. In the end, you can establish a solid relationship with the supplier. This is where supplier management becomes crucial. 

What is supplier management, and how can you turn it into a competitive advantage? Let’s find out.

What is supplier management?

The process of finding, acquiring, and effectively managing the resources and suppliers necessary for a business’s day-to-day operations is called supply management. Supply management involves purchasing physical commodities, data, services, and other vital resources that enable a business to continue and grow. Supplier management is the relationship between a buyer and a supplier, subject to goods or services being obtained and supplied into your organization, which in turn defines the type of working relationship you should look to develop with your suppliers. This relationship is subject to goods or services being obtained and supplied to your organization. Managing relationships with one’s suppliers is an essential trait for all managers involved in purchasing and supply.

Why does a business need supplier management?

When it comes to determining the reasons why businesses require supplier management, there are two primary pillars that you need to be aware of:

  1. To determine whether or not the performance of the suppliers meets the standards of the organization
  2. To find opportunities for improvement while engaging with suppliers throughout the lifecycle of their products.

These two elements are the primary drivers behind the necessity for businesses to have supplier management, which guarantees that they are obtaining the most value from the relevant suppliers for the requirement(s) at hand. Given the resources that have been spent on the relevant suppliers.it is essential to monitor and evaluate a provider’s performance to get the most out of their services. An organization may build a transparent relationship with its supplier if it communicates and provides feedback regularly. This makes it easier to identify areas of development and discover solutions promptly.

Additionally, supplier management can help reduce costs in numerous aspects of your contracts, such as early payment discounts and volume pricing. These cost savings can be realized. Altering your supply chain regularly results in indirect expenses, some of which might be far higher in magnitude than the monetary value.

How to build an effective supplier management system

Chances are that your company already has a supplier management system in place. But if the system is being managed by one person using a variety of manual and disconnected processes, then it’s not much of a system.

You need to implement modern supplier management systems that integrate automation and documentation and can operate without much human involvement. To build a modern and effective supplier management system and get the most out of it, it’s crucial to understand the whole supplier lifecycle. Here are the steps in supplier management:

Step 1: Qualification

Who is the right supplier for you, and why should you choose them? The qualification stage assures that you are hiring the most qualified supplier at the best price who can provide the essential goods and/or services you need. For the best results, it is best to evaluate potential suppliers using a set of criteria that is standardized.

Step 2: Onboarding

After you’ve decided on a new supplier, it’s time to add them to your system. Because the onboarding process is a two-way street, your company and the supplier must communicate information for it to succeed. Again, it is in everyone’s best interest for this procedure to be as standardized as possible.

To construct an effective workflow, you must digitize everything, including the onboarding process, by using online forms and electronic signatures. You will notice a reduction in the number of errors you receive due to this method. You will also be able to automate certain processes, such as sending email notifications in response to events such as approvals or signatures.

You can synchronize your criteria with the application process, which is an additional advantage of the type of workflow based on forms. This enables you to disqualify suppliers’ applications that do not satisfy your requirements, saving your company the time and effort of manually reviewing suppliers who are not a good fit for your business.

Step 3: Segmentation

Classifying suppliers is an essential component of the overall supplier lifecycle management process. It is the practice of classifying suppliers into distinct supplier quadrants according to a predetermined set of variables such as supply risk, total spend, the total cost of ownership (TCO), quality, profitability, and performance, amongst others.

Step 4: Collaboration

The supplier collaboration process prepares the way for the mutual development of suppliers and buyers through the development of new products and services and changes to existing processes. Companies who work closely with their suppliers see growth that is twice as quick as that of their competitors that neglect the importance of supplier collaboration.

Step 5: Evaluation

Evaluation of the suppliers is the very last step of supplier management. At this point, the supplier’s performance is evaluated and checked to see if they are adhering to the conditions of the contract. The evaluation is based on various variables, such as the time it takes to deliver the product, the price, the amount of production, the quality, the technical support, and the services. In addition, it is essential to evaluate the supplier according to his capacity to deal with unanticipated procurement emergencies.

Consider developing a supplier dashboard that can supply you with data in real time to assist you in reviewing the performance of your suppliers rather than performing manual evaluations of their work on an ad hoc basis. This will save you time.

Streamline your Supplier Onboarding

Streamline your Supplier Onboarding

Suppliers are essential parts of the business module. You must ensure that your business maintains a good and healthy relationship with your suppliers. You must have a well-defined and prominent onboarding system and procedure to establish that. 

Unfortunately, onboarding suppliers is a local procedure as suppliers may vary from region to region, especially for global enterprises. The regional nature of suppliers results in an onboarding process that is not well-defined, centralized, or easily managed. Due to this, onboarding processes can take a long time. 

However, there are ways where you can streamline your supplier onboarding procedures. Consider using these five methods to improve your onboarding process.

Opt for Self-Service Portals for Suppliers

One of the main steps in the onboarding process is to collect and go through all relevant information about suppliers. This can be a lengthy procedure as information is exchanged back and forth between potential suppliers and the company to collect all the necessary information. 

This not only wastes time but can also be an expensive process. However, all these hassles can be avoided by simply making self-service portals for suppliers. The suppliers can upload and submit all the required documents on their own time, which is much faster than traditional means. The company can review them immediately and move on to the next step. 

Access and Management of Centralized Data 

Information and data are big factors for all kinds of business activities. You would want valid and correct information about your suppliers, which you can access easily. Otherwise, it may cause significant issues in the future. 

To avoid that and ensure that all your information is correct and centralized, you can implement services that can apply information validation rules to all the data being collected in your database. 

Also, having all your information gathered and organized in a centralized platform will allow convenient access. With the self-service portals, onboarding processes can become simpler and take much less time. 

Work on Your Onboarding Qualifications to Reduce Risks

A significant factor in the onboarding process for suppliers is the risk factor. You can never predict the authenticity of a supplier. Therefore, to avoid that, ensure you have a thorough process with specific qualifications. Make sure your supplier is someone who can deliver what you expect. 

To reduce the supplier risk factor, ensure proper communication wherein you convey to the suppliers the values, goals, and expectations of your company while understanding their conditions and what they have to offer. 

Only when your onboarding qualifications are met should you proceed with the next steps and consider whether you want that supplier to be on board.

Integrate Other Business Systems for Maximum Benefit 

As mentioned earlier, data is an essential factor that can help you make or break the process. It can help you sign contracts with trustable suppliers, but there’s more to consider.

Once the onboarding process is complete and you have successfully selected and welcomed the suppliers, you can further use that information to improve upcoming processes. 

For instance, you can integrate this collected information with other business systems, such as Product Information Management Systems and ERP, to make better-informed decisions and improve business activities. 

Maintain Consistency and Transparency 

Lastly, you would want your onboarding processes to be consistent throughout your company in its various locations. While companies have different onboarding processes and separate information bases for different locations, it can get troublesome if you want an overall view of your suppliers. 

Therefore, opt for a system or tool that will offer you a centralized platform from where you can conveniently implement a universal onboarding system for your company. This way, you will also have all your supplier information in one place, making it easy for you to have an overall view and transparency of supplier data. 

You can further use this collected data to do better negotiations and get into better deals with suppliers. 


The onboarding process for suppliers is a crucial process that will help you come in contact with trustworthy suppliers with whom you can expect a long business relationship. 

To create a great professional relationship with your suppliers, plan and figure out the onboarding process in detail. As an additional resource, check out these tips on streamlining your onboarding process can help you improve your supplier relationship, as suggested by leading companies in the supply chain.