Supplier management is the act of planning, shaping and developing relationships between buyers/customers and suppliers. The process can be subdivided into evaluation, development, integration and controlling of the involved collaboration and is used to assess the respective supplier’s performance, fulfilment of and involvement in ordering processes. This reduces the risk of supplier-side failure whilst other benefits include decreased procurement costs, higher procurement efficiency and long-term security of supply.
Increasingly complex and error-prone supply chains – not least due to events such as the coronavirus pandemic, China’s zero Covid strategy and the war in Ukraine – have highlighted the strategic importance of improving purchase order management strategies. However, it is not just the current situation that is driving purchasing departments and buying centres to streamline their ordering processes, expand their supplier bases, efficiently manage their suppliers and thus ultimately curate long-term, strong supplier relationships. The prospect of becoming more competitive, reaping the rewards of being a preferred trading partner and even improving their own performance are additional significant benefits when implementing efficient POM concepts.
But what is the best way to approach this task? A key consideration is identifying an automated, data-driven supplier management solution with transparent process-relevant data exchange between buyers and suppliers.
In June 2020, US consulting company Forrester published a report1 on the strategic importance of procurement and supplier management. Among other findings, the report identified a lack of suitable tools for overcoming issues (e.g. diverging tech, time zones, business conventions) and improving communications (e.g. real-time data exchange, timely alerts in case of deviations). This shortage of tech was found to be one of the key hurdles respondents faced when implementing seamless buyer-supplier processes2. Today, i.e. two years later, Forrester has brought out a new report on the very same topic3, highlighting the continued importance of the issue. Here, too, the current IT landscape was criticised as being too complex to manage supplier relationships effectively.
In 2022, the Lobster Group, or rather Lobster PRO GmbH, launched its Supplier Management package solution – a tool designed to solve precisely these issues. Aimed at MSEs and large corporations, it is a HTML5-based, no-code software. As a gold-standard, user-friendly software, it can be individually configured and is compatible with all common browsers and devices.
The Supplier Management package solution seamlessly automates all workflows between consignor and consignee (via an online EDI portal or direct EDI/Webservices integration). The standard version of the software also includes the option to manually or automatically import orders addressed to the supplier from the buyer’s ERP system. Users can also attach order documents e.g. technical specifications, define general or specific delivery tolerances and manage deviations. Suppliers are also able to automatically export order confirmations to buyers’ systems, manage deliveries with the click of a button and, where necessary, alert recipients to quantity or deadline deviations and partial deliveries. What’s more, shipping notifications are not only sent to the purchaser, but are also forwarded to set logistics partners. The well-designed order status interface means buyers can enjoy seamless status overviews of their expected delivery, with the option to contact select partners directly by email. PDF delivery notes can be created and conveniently sent to print via the online UI. Optional add-ons include features such as supplier invoicing support, time slot management, track & trace, WMS integration and self-onboarding for suppliers. Users can always upgrade to the full version of Lobster_pro in order to benefit from more comprehensive business process automation functionalities.
Not only do the above features simplify daily supplier management processes. They also help cut procurement costs, i.e. contribute to value engineering – a goal that 73% of decision-makers interviewed for the Forrester report listed as their top procurement priority4:
- Tracking order and delivery processes in real-time means bottlenecks can be quickly identified and alleviated e.g. by commissioning additional suppliers, thereby minimising downtime and avoiding potential contractual penalties.
- Precise delivery volumes and delivery times help with inventory planning and cut interest and storage fees.
- Automated processes streamline the goods acceptance process, meaning trucks can be unloaded more quickly, formalities can be carried out without error and the delivered goods can be used for further value creation in a shorter period of time.
- The automated documentation of all processes increases purchasing compliance and avoids downtime and charges related to wrongly delivered orders or shipments that do not comply with the agreed specifications.
- Using automated rather than manual entries for delivery lists, customs forms or fleet management solutions reduces the risk of costly errors due to typos, different date formats (12.05.2022 versus 05-12-22 versus 22-05-12) or separators (1.250 versus 1,250 versus 1 250).
- Deviations are picked up and rectified quickly with central monitoring, limiting exposure to unplanned expenses.
- The automated alerts mean those responsible need only intervene if there is an issue, and can use their time more productively, concentrating on tasks that are critical to the success of the business.
- Finally, consolidated data ensures supplier transparency. Trader performance can be assessed easily, while potential issues are resolved quickly, ensuring the most cost-effective suppliers are retained for the long haul.
The cost advantages of a software like the Supplier Management package solution from Lobster PRO are evident. As already touched on above, the software also delivers on other corporate objectives, e.g. IoT and AI integration, security of supply, securing and retaining ‘preferred position’ status with key suppliers, adherence to internal and external compliance regulations and, finally, enabling greater business agility.5 Not only are seamless, data-driven, automation-based interactions between buyers and suppliers a key factor when safeguarding cost performance and protecting businesses against current supply chain issues. They are also pivotal in view of the growing importance of Industry 4.0.6