How organizations can transform their Supplier Relationships

Excerpts from the Speaker Talk by Ms. Ila Imani – CEO at the Integrated Finance and Supply Chain Summit 2018 in Mumbai.

The Problem in the Current Scenario with Suppliers and The Buying Organization

Suppliers are communicating with different entities in an organization:

  • Supply Chain or Procurement team: This is the team which buys from suppliers
  • Business Users: They are departments and branch office users who use the product or service
  • Finance Team: This is the team which pays the supplier

There is a constant tug of war in this ecosystem as there is no single platform which brings everyone on one page. So often the supplier is left high and dry not knowing how to meet expectations of all while not getting clarity on payments. In fact, all teams are inundated with high workloads and no clarity on statuses:

  • Supply Chain or Procurement team
    • Finding new suppliers
    • Time consuming paper work and onboarding of supplier
    • Never ending negotiations
  • Business Users
    • No standardized items to select product from, create new specs every time
    • Not aware of payment status when suppliers follow up
  • Finance Team
    • No visibility on PO when processing a supplier bill
    • No information about cost center allocations for the expense
    • Accounting is time consuming
  • Suppliers
    • Delay in receiving payment
    • Continuous follow up takes away precious time
    • No status update when they call up users

Why is it important to transform supplier relationships?

Suppliers can be your pillar of support when you need them, when you need urgent deliveries, when you need special assistance and you want them to go out of their way.

In fact, increasingly, companies are looking at Suppliers as a competitive advantage and a strategic asset.

So how do we go about transforming the supplier relationships?

We need to build relationships with Suppliers which are win-win. Relationships which are built on 3 tenets: Trust. Care. Respect.

Organizations need a procurement management technology platform to achieve this. A platform which brings all the stakeholders on the same page and helps build respect and trust.

Using Technology to build Trust and Respect during Procurement & Sourcing process

A technology platform enables users to provide clear specifications of what to procure.

Procurement team invites suppliers, publish date and specifications to all suppliers, transparently, with no favoritism.

Suppliers ask queries and respond on the portal- ON TIME.

A fair comparison is done of all the responses the final supplier is decided and recorded.

During Negotiations:

Fair negotiations can be done using an online portal to build trust in suppliers, instead of multiple rounds of closed door negotiations.

Online reverse auction events are created, and suppliers are invited online. All supplier bid real time and the event closes with suppliers bidding their best prices. Event closes and procurement team shortlists the lowest cost suppliers. The entire process is transparent, quick and seamless.

Giving enough time to the Supplier to Deliver:

You not only need to be transparent and impartial during the procurement process, but you also need to complete the process of supplier empanelment and PO placing at your end to give the supplier adequate time to deliver.

So, the need of the hour is to empanel your supplier quickly and get the PO out FAST.

A Supplier portal helps you:

  1. Empanel your supplier quickly
  2. Make a PO quickly
  3. Get the PO authorized by the right people, fast
  4. Specify the Taxes rightly so that Invoices are raised correctly
  5. Do proper cost allocations
  6. Check budget before raising the PO

Finally, use Technology to Pay on Time!

Paying on time is no longer a largesse on behalf of the buying organization. It’s a necessity. It’s a known fact that paying suppliers on time is a good business practice since it helps you maintain a good relationship with your supplier and get the best service.

The Procure-to-Pay system with the Supplier Portal streamlines the entire process and helps you make supplier payments on time:

  • Procurement team can publish the PO online on the Supplier portal
  • Suppliers can get notified on mail, as well as log in to see their POs so they can start the delivery process
  • After delivery, suppliers can flip the PO to an Invoice to submit accurate invoices
  • The A/P team can reach out for any clarification/documents related to the Invoice
  • Finance team can accept the invoices and start processing the invoice

Checking the Invoices before paying them:

In the interest of speed, no organization would like to compromise the due diligence process of checking the Invoices.

The online Invoice Due Diligence process brings in tight controls, with the help of these checks in place:

  1. Checking Invoice against the PO
  2. Accept Invoices after checking GRN status
  3. Preventing Duplicates
  4. Raising an alarm for “Seemingly Duplicate” invoices
  5. Enforcing Process Checklists before accepting or processing an Invoice
  6. Enforcing Rate Cards for prices
  7. Ensuring Advances are settled before payment
  8. GST Auto-Computation
  9. Computing Withholding taxes
  10. Accurate Accounting Entry Generation

Expenzing is an end-to-end Spend Management solution that does all of this and even more.

It helps manage entire Strategic Sourcing and Procurement Process with solutions like Supplier Empanelment, Supplier Portal, Procurement Manager, Invoice Authorization, RFx Management, Reverse Auction to help you manage you supplier relationship. Plus, it augments your ERP.

With a next-gen solution like Expenzing, you can build a competitive edge, an unfair advantage by transforming your supplier relationships.

You also reduce your organization expenses by reducing unauthorized purchase request, getting better rates, putting budget controls, reducing cost of A/P, getting visibility into spend and reducing risk of fraud and leakages.

In a nutshell, you can reduce your organization expenses while enhancing supplier relationships.

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