While a business enterprise is ultimately measured by the bottom line or profits, it is essentially defined by relationships with customers and suppliers. How well these relationships are managed has a dramatic impact on the performance of the business.
Today, companies are under relentless pressure to cut costs, reduce waste, eliminate inefficiency, and consolidate operations. The mandate for managers across the organization is often: control expenses now. To survive in today’s economy, every enterprise must put the reins on spending in every location and category. This is easier said than done. Unauthorized spending or rogue spending infiltrates even the most disciplined organizations. Lists of suppliers to the company grow like weeds. In many companies, spending approval policies and procedures are done manually and become cumbersome. Suppliers often remain passive, unaware and uninvolved with the activities of the company. Mergers and acquisitions only exacerbate the problem. There are significant savings awaiting companies who exploit world-class applications and best practices to manage supplier relationships. These savings, which analysts report at 5-7% or more, drop straight to the bottom line, yielding 30-40% increases in profit.
The most commonly accepted definition is that Supplier Relationship Management (SRM) is an integrated and comprehensive approach to manage and streamline the day-to-day interactions with an organization’s supplier base. Generally, this is made up of the software and business processes that create collaborative communications and align an enterprise with its suppliers. Similar to customer relationship management (CRM) suites, which gained prominence by helping companies acquire, service, and retain customers, SRM focuses on helping companies maintain relationships with suppliers by mutually driving down costs and managing risk associated with those relationships. Without careful management of supplier relationships, companies risk paying too much for goods and services, ultimately bearing the consequences of poor supplier performance, while carrying the costs of undisciplined spending, and squandering the opportunity to focus purchasing professionals on the most strategic activities. The automation of the purchase order cycle can represent significant cost and time savings, contributing directly to bottom-line profitability.
An SRM software solution provides enterprises with the necessary tools and solutions to achieve optimal performance in supplier relationships, including sourcing, procurement and spend analysis. Sourcing is the process of leveraging your purchasing power across your company’s entire supplier base regardless of industry to yield reduced prices and improved terms on commonly purchased goods and services. An SRM software solution can automate RFx (requests for information, quotes, or proposals) tasks, accelerating the process and helping negotiate the best value with an outside contractor, for general goods and services or for legal, marketing and operations support services. The company’s purchasing or buying department can evaluate suppliers on price and nonprice parameters with weighted attribute RFx. Streamlining the manual request for quote or proposal process allows the company to evaluate and select suppliers based on value to the organization. The procurement functionality in an SRM solution allows end users to create their own requisitions 24/7 from any location while improving purchasing controls. This is achieved providing users access to catalogs and supplier e-commerce sites within the security and approval framework established by the purchasing department. The result is better control over who buys what and when with less work on everyone’s part. Spend analytics features within the SRM solution can combine a variety of metrics and dimensions to provide you with potentially thousands of key performance indicators (KPIs) to perform detailed analysis of the spending, processes and suppliers’ performance.
With the tremendous amount of goods and services required for operating enterprises, online purchasing has become an increasingly efficient and dynamic comparison-shopping model. Web-based sourcing and procurement solutions provide extensive flexibility and reach by allowing a buying organization to more effectively manage competitive bidding on contracts and control the entire requisition-to-reconciliation cycle.
A world-class SRM software solution, like the one Epicor offers, provides the ability to quickly elevate, manage, and leverage win/win relationships broadly across the supplier base. Using leading technologies to meet the most demanding requirements for enterprise applications, and intuitive interfaces, it can provide a lower total cost of ownership and rapid deployment. Such solutions also have integration capabilities to the company’s existing back-office systems including ERP systems, homegrown or otherwise, using tools like Microsoft BizTalk Server and eXtensible Markup Language (XML).
Basil Daniells is Regional Sales Director - Middle East, North Africa & India for Epicor. Epicor is dedicated to providing integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) and professional service automation (PSA) software solutions to mid-market companies and divisions of the Global 1000. |
