Any marketplace is going to be influenced by the dynamic that develops between buyers and suppliers. This is essentially economics 101, but it’s an important and powerful principle that applies to a wide variety of industries. In procurement, the practice of maintaining vendor relationships is known as supplier management. Supplier management is arguably one of the most important aspects of procurement as a whole. That’s because a well-developed and well-maintained supplier relationship can be one of the most valuable assets that your business creates. Plus, by building long-lasting supplier relationships, your procurement team will develop a strong reputation among vendors and suppliers, which will innately drive the value of your offered contracts higher. 

Supplier management developed as a widely accepted procurement practice as a series of processes and systems that ease the development and maintenance of supplier relationships, while also creating additional value within your organization. 

Defining Supplier Management

While supplier management may look slightly different from organization to organization, the basic principles in answering the question: what is supplier relationship management?  remain constant. The idea is that supplier management is a series of enterprise-wide systems that are designed to evaluate the value of any given supplier in regard to business strategy, tactics, and overall goals. 

By conducting regular vendor management your business will put itself in a position to have more control over the suppliers and vendors with which it conducts business, as well as more transparency into the value that is being returned on awarded contracts. Having access to this important insight will shed light on various areas in which your organization can improve through cost reduction, improved efficiency, or even rates of productivity. 

Implementing Supplier Management 

Understanding what supplier management only counts for half the equation. Creating a plan to implement and regularly practice supplier management is a whole other beast. However, thanks to sophisticated procurement technology, like that offered by ProcurePort, implementing supplier management has become much swifter, and much easier. The modern-day procurement professional relies on a combination of tried-and-true practices, as well as a suite of powerful technology. With the way that industry has scaled over the years, and the evolution of technological integration into our everyday lives, procurement professionals rely on supplier management software to assist with massive amounts of data, constant running of formulas, and other feats that aid procurement professionals in their line of work. 

Although sophisticated procurement software certainly eases the implementation process, it’s still important to approach supplier management implementation with a well-thought-out plan in place. By creating an implementation plan your procurement staff will all be aligned and on the same page which is absolutely vital to achieving a successful implementation. 

Why Contract Management Matters

Contract management is like the yang to supplier management’s yin. They really go hand-in-hand with one another. Contract management is the process through which organizations analyze and evaluate the value of current and existing contracts that are awarded, potential contracts with potential suppliers, and every procurement contract in-house, no matter what stage it’s at. 

The best contract management software utilizes a combination of artificial intelligence, data analysis, and automation in order to conduct a series of evaluations on the lifetime value of the contracts your procurement department is handling. This gives your procurement professionals the insight they need to eliminate duplicate and redundant contracts or contracts that aren’t meeting their projected value, while simultaneously giving them the security and reassurance they need to renew contracts in good standing. 

Putting the Procurement Puzzle Together

Procurement is truly an organization-wide effort, and it needs to be treated as such. Understanding how large of a puzzle a comprehensive procurement strategy really is, will help you and your organization tackle the creation of a procurement solution that addresses the entire vertical. While supplier management and contract management are extremely vital aspects of procurement, there are other important areas to focus on as well. 

For instance, understanding the distinctions between direct and indirect procurement is absolutely integral, as is exploring various procurement strategies, like container management, until you find the right series of tactics that works for your organization. 

Wrapping Up on Supplier Management 

Supplier management is a big piece of the procurement puzzle, and with sophisticated procurement software, your procurement team will be equipped to tackle the needs of a modern-day organization, at any scale. Invest in supplier management software, and join the modern era of procurement. By investing in supplier management and other procurement technology, you’re better positioning your staff and your firm in the market. 

For more information on supplier management, contract management, or anything else related to procurement, keep browsing ProcurePort. ProcurePort is the internet’s premier place for procurement knowledge and information, software and tech, and everything you could imagine in between.