It is not new to witness several negative events involving business partnerships. These situations, in addition to affecting the image of companies in the eyes of the public, cause, above all, great damage to society.
Many companies hire suppliers with a single goal: to reduce costs. However, there are several other issues that must be taken into consideration when closing a business contract. Quality, delivery time, risks of shortages, and joint tax and labor liability are just some of the many problems that can arise when negotiations are based on price.
Today, we discuss the benefits of Supplier Management and the importance of implementing it in your business.
Remember: cheap, most of the time, ends up being very expensive.
Read on!
What is Supplier Management?
Supplier Management is a set of techniques that aim to optimize the management of supply sources within a company.
The process focuses on ensuring the best deadlines, prices, negotiations and deliveries of products and services.
However, nowadays, more important than these items, Supplier Management helps companies understand where their supply sources come from, whether they are sustainable, ethical, legal and whether they do not pose any type of threat to society, whether in the short or long term.
Check out the 7 benefits of implementing Supplier Management in companies below:
1. Slave labor, racism and other human rights issues
Every company is subject to risks, but when there is an efficient Supplier Management model, these risks are drastically reduced.
Increasingly, companies need to know their business partners in depth in order to avoid problems that could harm the brand's image and reputation.
Being aware of suppliers and third parties helps you hire partners who are in line with your company's ethical and moral values.
A while ago we did a very interesting post about Tiffany & Co. and its initiative against “blood diamonds” on the African continent.
2. Sustainability
There is no point in a company positioning itself as an activist for environmental causes if it does not keep a close eye on its supply chain.
The beauty industry, for example, needs to know whether its raw material suppliers use it consciously and with practices that are not harmful to the environment.
Vetiver is a plant widely used by the perfumery and cosmetics industry, but its uncontrolled exploitation can cause imbalances in nature, since its roots, up to 6 meters deep, prevent soil erosion.
With good supplier management, it is possible to know where the oil extracted from the plant comes from and whether it lives up to the company's positioning in relation to the market.
3. Quality of the product delivered
Os Providers are directly related to the product offered to the end customer. Therefore, the quality of the inputs is fundamental and must be taken into consideration when closing a business agreement.
If there are two suppliers that charge the same price, the best way to go is to choose the one that has another differentiator, such as quality, for example.
Good supplier management is vital to ensure that your customers' expectations and needs are met, nurturing their relationship of trust with the company.
4. Meeting deadlines
In addition to quality, supplier management is also important to ensure that delivery deadlines are met. In services and products that are essential to the population, this item becomes even more important.
Another point to consider is checking supply availability in case your demand experiences a sudden increase. Working with suppliers who are not ready to grow with your company is a risk that can compromise operations.
In this case, you can look for other sourcing options or develop practices to help your business partner grow with you. It is essential to ensure that inventory is always at adequate levels.
5. More competitive prices
Effective supplier management is one that provides a good relationship between the company and its business partners. The stronger this relationship, the greater the chances of achieving differentiated conditions, including in relation to price.
Another positive point is having more elements to evaluate the risk management of acquisitions made, especially if the suppliers are approved.
The rule is to know your supplier well, as well as invest in strengthening the partnership with them. On the other hand, be careful not to build a relationship of dependence and always keep other supply source options up your sleeve.
6. Greater added value of products
The combination of all the factors described so far helps to ensure that the added value of your product is high, making the company more competitive in the market.
If a supplier offers higher quality items or services, meets delivery deadlines, follows environmental, tax and labor laws — and all this at a lower price — you save money, suffer fewer risks and can even make a higher profit.
The best way to achieve this added value is by efficiently managing supply sources. If production, inventory and purchasing work together, it becomes easier to find a highly strategic point to optimize the supply of inputs to the company.
7. Structured growth with supplier management
From a broad perspective, one of the impacts of supplier management concerns the possibility of structured growth for the company. When there is strategic negotiation in corporate purchases, the company increases its chances of expanding profits.
Furthermore, end customer satisfaction with a quality product or service increases the number of loyalty programs, which means greater predictability of revenue in Recurring Revenue.
The result is growth in a structured, safe and sustainable manner, avoiding risks that compromise its already consolidated position in the market.
How is your supply source management going? Tell us in the comments!
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