Modern manufacturers face a lot of pressure from customers and competitors to deliver the highest quality of products at the most affordable prices. To achieve this, they work with a wide range of suppliers.
Suppliers play an important role in the success of every business. However, supply chains are growing increasingly complicated; finding good suppliers and maintaining solid relations with them can be a highly beneficial tool in the quest for business expansion and success. In the following paragraphs, we are going to discuss some of the ways an effective supplier relationship management can benefit you.
Suppliers play an important role in the success of every business. However, supply chains are growing increasingly complicated; finding good suppliers and maintaining solid relations with them can be a highly beneficial tool in the quest for business expansion and success. In the following paragraphs, we are going to discuss some of the ways an effective supplier relationship management can benefit you.
1. Cost Savings
There are initial costs involved when it comes to finding and negotiating new deals with new suppliers. In fact, there are costs involved when you want to set up deals with new suppliers. However, with effective application of supplier relationship management program, a business can eliminate a lot of these costs.
With time, the application of SRM will help a business reduce quality issues, availability problems, and delays. Additionally, suppliers are inclined to share cost efficiencies obtained via the adoption of new methodologies or technologies with a business in which they have already established a close working relationship. With SRM, a business can achieve long-term cost savings which mean a better service for the consumer.
2. Increased Efficiency
Perhaps, this is the greatest benefits of supplier relationship management. As a relationship develops between the business and the supplier, communication improves. Suppliers can now understand their client better and be able to meet his need more effectively. Moreover, systems and controls in the SRM program enable both parties to identify any problem or issues that may arise and address them effectively.
3. Revenue Growth
Both the supplier and the buyer can enjoy revenue growth gained through greater operational efficiencies derived from the supplier relationship management program. The close collaboration between the both parties allows them to go after new market opportunities, sharing risks and growth potentials.
4. Risk Management
A breach of customer information can have a huge consequence on a company's reputation, damage a brand name, and even lead to loss of sales. With the SRM program, both the supplier and buyer can establish a solid risk and control framework to manage customer's information efficiently. Additionally, this framework achieved through SRM allows supplier managers to have a better understanding of supplier and internal control controls for managing risk.
5. Innovation
With greater collaborations, the supplier can share information that can help their customers access new technologies, new markets, and geographies. Moreover, brainstorming at the leadership level can spark new ideas that can lead to improved efficiency and greater revenue.
6. Preferred Buyer Status
Changing suppliers constantly is not only expensive but time-consuming; it takes internal resources to find new suppliers and negotiate fresh deals. Even with the promise of lower costs from the new supplier, the long-term relationships built with strategic partners are still more valuable and preferable to short-term gains. A buyer can become a "customer of choice" simply by sustaining supplier relationship; this will not only help him minimize costs and fluctuations in commodity prices but help him to establish a transparent cost base.
7. Outsourcing Activities
As the relationship between the both parties deepens, they come to trust each other more. This will allow the business to outsource non-core activities permanently to the supplier, including some level of customer service and inventory responsibility.
There are initial costs involved when it comes to finding and negotiating new deals with new suppliers. In fact, there are costs involved when you want to set up deals with new suppliers. However, with effective application of supplier relationship management program, a business can eliminate a lot of these costs.
With time, the application of SRM will help a business reduce quality issues, availability problems, and delays. Additionally, suppliers are inclined to share cost efficiencies obtained via the adoption of new methodologies or technologies with a business in which they have already established a close working relationship. With SRM, a business can achieve long-term cost savings which mean a better service for the consumer.
2. Increased Efficiency
Perhaps, this is the greatest benefits of supplier relationship management. As a relationship develops between the business and the supplier, communication improves. Suppliers can now understand their client better and be able to meet his need more effectively. Moreover, systems and controls in the SRM program enable both parties to identify any problem or issues that may arise and address them effectively.
3. Revenue Growth
Both the supplier and the buyer can enjoy revenue growth gained through greater operational efficiencies derived from the supplier relationship management program. The close collaboration between the both parties allows them to go after new market opportunities, sharing risks and growth potentials.
4. Risk Management
A breach of customer information can have a huge consequence on a company's reputation, damage a brand name, and even lead to loss of sales. With the SRM program, both the supplier and buyer can establish a solid risk and control framework to manage customer's information efficiently. Additionally, this framework achieved through SRM allows supplier managers to have a better understanding of supplier and internal control controls for managing risk.
5. Innovation
With greater collaborations, the supplier can share information that can help their customers access new technologies, new markets, and geographies. Moreover, brainstorming at the leadership level can spark new ideas that can lead to improved efficiency and greater revenue.
6. Preferred Buyer Status
Changing suppliers constantly is not only expensive but time-consuming; it takes internal resources to find new suppliers and negotiate fresh deals. Even with the promise of lower costs from the new supplier, the long-term relationships built with strategic partners are still more valuable and preferable to short-term gains. A buyer can become a "customer of choice" simply by sustaining supplier relationship; this will not only help him minimize costs and fluctuations in commodity prices but help him to establish a transparent cost base.
7. Outsourcing Activities
As the relationship between the both parties deepens, they come to trust each other more. This will allow the business to outsource non-core activities permanently to the supplier, including some level of customer service and inventory responsibility.
