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Top 3 Reasons To Invest In Supplier Enabling Technology
Top 3 Reasons to Invest in Supplier Enabling Technology
At every stage of the product lifecycle, suppliers play a critical role. Companies must collaborate closely with their suppliers to get the most out of their products. From sourcing raw materials to assisting with production ramp-up and finding better raw material options, companies must have a clear communication channel and strategy with their suppliers to meet expectations.
The role of a supplier in a business can be a demanding one. Because suppliers exist outside of the business, the company must be cautious about the information it provides them. The company must strike the right balance because the supplier must feel valued by the company before they l provide excellent service and go above and beyond the call of duty to impress the company.
What is Supplier Enablement?
Connecting and onboarding selected suppliers to your electronic systems is known as supplier enablement. It entails strategy creation, analysis, compliance policies, ongoing training, and communication. When supplier enablement practices are prioritized, mutually beneficial ...
... and long-term supplier relationships emerge.
Reasons to Invest in Supplier Enabling Technology
Here are the top 3 reasons why now is the right time to invest in Supplier Enabling Technology:
It helps reduce procurement costs with hosted catalogs and streamlines supplier communication related to orders and quotes.
You can help reduce labor costs, increase productivity, and improve category spend management by electronically automating your order processing with your supplier. According to research, technology can reduce the cost of purchase order requisitions, purchase requisition forms, submittals, and approvals by up to 75%. Electronic invoices can also generate savings of up to 67% for an organization.
Moreover, supplier-enabled technology helps reduce procurement costs with hosted catalogs. Hosted catalogs bring together all of the product content from multiple integrated vendors in one place, giving you complete control and assisting with contract compliance.
With supplier-enabled technology, the procurement teams can go to the supplier’s catalog and shop for the items. The quote data is automatically transported into their procurement system, pre-populating the purchase order. Once purchase order approval is obtained through the po system, the purchase order can be submitted to their procurement software system, and the order data is automatically transported to the supplier’s site.
This ensures that the procurement team only buys from the approved suppliers and items, which helps avoid dark purchasing. In addition to that, necessary approvals allow organizations to limit maverick spending, and automatically quoted data clearly communicated via the system helps avoid processing-error costs.
Invoices detail the product or service being provided, the unit cost, the total number of units purchased, payment terms, payment methods available, handling, tax changes, and other financial details like early payment discounts or late payment penalties.
Invoices assist finance teams in keeping track of accounts payable by tracking the sale of your company's goods and services.
The risk of manual human errors and corrections increases with complex and manual invoice processing, resulting in payment delays. Late payments not only put you in a financial and mental bind, but they also waste time and resources that could be better spent on follow-ups and chasers for finance departments.
Chasing down late payment can be a time-consuming and difficult process in and of itself, which can leave a supplier extremely frustrated. This sometimes leads to suppliers quitting your organization and switching to competitors.
With the supplier-enabled technology, suppliers can track their invoices to know whether their payment is stuck in the approval process inside the organization or whether it is a delay caused by their specific bank. They will know when their payment is approved and released, which keeps them informed and satisfied with the organization while reducing stress.
Buyers and sellers can check invoices instead of requesting receipts or transaction information, avoiding unnecessary communication and saving time. All of this contributes to developing trust between an organization and its vendors.
Whereas internally, error checks and automatic matching ensure that money is sent to the correct supplier or vendor and detect potential overpayment in cases where the invoice and purchase order do not match.
Improved Supplier Relationships
Supplier relationships improve naturally as a result of implementing online technology. Suppliers will naturally be more at ease with the organization if they have more confidence and assurance of being paid on time.
Suppliers will be able to grow their business with improved strategic clarity if they can count on being paid on time and accurately within the clearly defined terms. They'll also appreciate the time saved by dealing with cloud-based procure-to-pay solution processes that are more efficient.
Suppliers will benefit from real-time digitized procurement solutions, which will reduce the stress and effort that come with uncertainty. Possibly more than anything else, this intangible benefit improves supplier relationships.
Feedback and open communication become easier as companies build strong relationships with their suppliers. As a result, collaboration becomes seamless, and the company can provide feedback to its suppliers on how to improve service and vice versa.
When a company and a supplier collaborate closely, they can drive innovation. As a result, both parties will be able to vastly improve their offerings.
Furthermore, if you work with multiple legal entities or completely separate businesses, streamlining your vendor lists can be twice as difficult. It's priceless to have a system that can manage your organization's structure. Once you have your supplier lists organized, you can prioritize your suppliers and manage relationships with them easily.
Technology has the potential to have a significant impact on the supply chain. There's no denying the value, whether it boosts productivity or lowers costs. While technology can improve internal operations, it can also improve relationships between buyers and suppliers. However, technology is frequently underutilized both internally and externally, which is a problem.
Buyer-seller sourcing, communication, payment processes, and operational transparency are all in desperate need of improvement. Procurement leaders should reconsider their current strategies and consider incorporating more technology into their systems. Using technology can help improve the procurement process's efficiency and the relationships necessary to maintain a successful supply chain.
Prasanna Rajendran is the Vice President at Kissflow, where he heads the business operations of Kissflow Procurement Cloud, a flexible procurement software for procurement teams to streamline all their purchasing processes in a single place. He has over 20 years of experience in technology and has helped Fortune 500 companies with custom solutions in the sourcing and procurement space.
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