Collaborative Procurement – Using Tech to Drive Relationships
“Sharing is good, and with digital technology, sharing is easy.”
– Richard Stallman, Free Software Movement Activist and Programmer
As we discussed in our previous article, the strength of Procurement directly correlates to the strength of its supply chain and wider network of external stakeholders. Having strong relationships with the supply chain has proven increasingly critical for success, particularly in light of high levels of disruption in recent years, making the ability to cultivate and maintain these relationships a key skill for the profession.
Procurement needs to ensure they have ‘Good’ relationships with suppliers, built on honesty, transparency and, most importantly, trust. This helps to create an engaged network and supply chain, who are willing and able to bring their A-Game to the table when challenges and issues arise.
However, once this network is in place, Procurement faces the question of how to effectively manage it, and how to do so in a way that delivers value for both parties. What are the key things that need to be factored in and what tools and technology are available to help support these activities?
Addressing Challenges
“We know how crucial payment is for suppliers and payment timing. So essentially we’re looking to deliver visibility with SAP Business Network.”
– Lorraine Yao, Director of Product Marketing, SAP.
Before organisations implement a new procurement solution or new technology, they first need to fully understand why they are doing it, what the end goal of implementation is and what issues, processes or queries it is going to resolve or streamline. Even when organisations do understand their end goal, they sometimes still end up implementing a ‘one size fits all’ solution that doesn’t align with these key factors.
The key to this in Procurement is understanding both the internal and external pain points that exist in the relationships. Some of the most common can include:
- A lack of visibility in order management and real-time updates on when goods are due to arrive.
- A lack of visibility in invoice processing, especially when it comes to why invoices are rejected and payments are delayed.
- Too many systems and communication channels in use, leading to duplication of effort and increased risk of missing key information.
- Overly-complicated systems that people don’t use, or have to work around in order to carry out their roles.
There is a major caveat to this before we delve into more detail on the technological solutions – they, in isolation, are not a panacea for all the issues in supplier relationships. Even with the best-fit technology solution in place, there is considerable input required from both parties to build a good relationship, though the technology can help with this.
Technology Drives Transparency
“I really believe that alignment and transparency are key from the outset. This, for me, is the secret to a fruitful alliance.”
– Julian Oakes, eProcurement Strategic Partner Alliance Manager, RS Group.
Understanding pain points is only half the battle for Procurement. They need to understand that they are unlikely to be their suppliers’ only customers, and therefore it’s highly likely that the suppliers are already using systems and platforms with other parties. This could lead to a situation where, if suppliers are transacting with your competitors already, you could end up being given lower priority if you have more cumbersome processes or systems.
There are systems that can help with this, such as SAP Business Network. SAP provides a platform for easier collaboration, automated process flows including validation of transactions, and a massive reduction in the requirement for manual processing. Not only this, but with the breadth of services offered and global coverage, buyers will find that many members of their supply chain are already working on the platform, speeding up adoption and time to value.
As with any good technology solution, it ensures a greater level of efficiency, reducing the time and resource burden for both buyers and suppliers, while at the same time driving compliance. Suppliers are able to see when goods are delivered, when invoices are approved (or rejected, and why), and when to expect payments, which enables them to plan their own business more effectively.
Technology and Trust
“You need transparency to build trust. You need trust to build transparency. And when you choose to trust, when you purposely start to share information, now we can use that information to do amazing things.”
– Kate Vitasek, Faculty, University of Tennessee & Founder, Vested.
Increasing transparency in supplier relationships can help to build collaboration in the supply chain and reduce confusion over processes by improving communication. This helps to build trust, both in the relationship and in the data being shared, which will enable more confident and timely decision-making. In doing this, it will help both sides of the relationship overcome issues and fix problems as they arise, rather than as a firefighting measure.
Technology is seen by many as a major positive in supporting this process and building trust in buyer-supplier relationships. However, research has shown that uptake tends to differ between industries. For example, in Oil & Gas, the overwhelming majority of organisations see technology as a positive factor, helping to increase efficiencies and speed processes up.
However, this number drops to around half in Utilities. The reason for this? A concern over the loss of human connections and engagement that has traditionally had a major input into business strategy and the more strategic aspects of relationships.
The key to ensuring that all of this works together is using the technology as a base and a platform for the relationship, but ensuring that the human element remains in face-to-face meetings, reviews and the sharing of information (which will maintain the necessary levels of trust).
If all of that sounds counterintuitive, then you need to get help from the experts. And this is where our new webcast comes in.
In partnership with SAP Business Network, Procurious brings you the ‘Collaborative Procurement – How to Build Stronger Supplier Relationships’ webcast. Join Procurious founder Tania Seary as she discusses how technology can help you to build stronger relationships with your suppliers, with renowned experts in the field: Kate Vitasek, Faculty at The University of Tennessee and Founder of Vested; Lorraine Yao, Director of Product Marketing at SAP; and Julian Oakes, Strategic Partner Alliance Manager E-Procurement – EMEA at RS Group.
Join the Collaborative Procurement group, by clicking the link below, to access the free webinar today.
