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How to strategically build competitive advantage through effective supplier relationship management with PowerPRM technology?
by Paweł Oskory on May 27, 2024 You read:
How to strategically build competitive advantage through effective supplier relationship management with PowerPRM technology?
Supplier relationships are influenced by a number of factors, such as the efficient organization of supply chains, logistics processes, as well as quality and innovation management, among others. How does the PowerPRM platform support building relationships with suppliers? We’ll talk about it in today’s post.
Optimal use of the value derived from a signed contract with a supplier is possible through relationship management. To be able to do this effectively, you need a tool that allows, among other things, to identify and properly use the potential of the established cooperation. Optimally selected methodology, innovative tools, communication tailored to the recipient, and involvement of the parties influence the development of additional benefits. As data from The Corporate Executive Board Company shows, up to 75% of the potential value to be gained from cooperation with suppliers can be lost through poor relationship management.
Challenges in supplier relationship management
Implementing the ideal collaboration model is difficult due to the risks present in many areas:
- Communication – the nature of supplier relationships is multi-faceted, which can make it difficult to share information. The PRM platform is a tool to develop this in a transparent and transparent manner. This area is supported by the Self-Service Portal, a hub for instant communication with partners and suppliers.
- Contract conflicts – efficient document management eliminates records that are unfavorable to the organization that do not meet the needs of the principal himself, but also of other suppliers or partners.
- Dependence on one supplier – the PowerPRM platform allows you to effectively manage the base of suppliers and partners and eliminate entities that do not meet the organization’s criteria (on the path of acquiring a partner – acquisition). Gathered on the PowerPRM platform, the supplier base allows you to respond appropriately in crisis situations: for example, in the event of a lack of liquidity of supply or technological interruptions on the part of a business partner
- Focus on cost efficiency – previous procurement models involved looking for suppliers to execute processes under the lowest possible contracts. With the PRM platform, organizations have the opportunity to launch various joint initiatives, such as pilot projects with the ability to verify supplier quality, cost effectiveness, and fit with the needs of the organization. In addition, in this model of supplier relationship management, through PowerPRM, they can implement audit processes (various types of business reviews) to verify the organization’s contractual assumptions or initiative.
- Lack of quality cooperation – sometimes it happens that cooperation with a supplier breaks down, resulting in a drastic decrease in its quality. In such a situation, organizations are forced to take steps, generally involving a search for a new supplier. In many cases, this can be a complex and often time-consuming process. The PowerPRM platform enables the creation of processes for acquiring (acquiring) a new supplier. A model can be developed that is ideally suited to the organization’s needs. Within this model, acceptance and verification processes can be mapped in detail. Technologies, product components, component quality and other relevant parameters present at the supplier depending on the business segment can be evaluated. Processes can be defined accordingly depending on business units, among other things, and include different acceptance criteria or validation steps. At the same time, the entire history of cooperation and full documentation will be preserved – in one place. Appropriately mapped criteria streamline the process of acquiring a new supplier. The PowerPRM platform provides a fast and precise way to control the entire life cycle. From the creation of a record in the database, through verification, approval at various levels, signing of relevant contracts and conversion of a potential to an active supplier.
Supplier cooperation path
In the case of the PRM platform, collaboration administration is an intuitive process tailored to the needs of the organization. Through its ability to model processes, it provides a wide scope for action at each stage.
The organization through the back-office application as well as the partner through the Self-Service portal has one-stop access to areas such as document databases, joint projects and initiatives with a preview to assigned tasks. The organization has the ability to organize and schedule business reviews, communicating partners through the portal.
The platform is a tool that actively supports the process of building and managing relationships. It allows you to achieve additional business value and organize the collaboration space, as well as assess which partners bring the most value to the organization.
The PRM platform enables:
- Map the supplier acquisition process, according to criteria, business units, acceptance paths and other requirements
- Process supplier agreements, define terms of cooperation, exchange documents
- Verify the supplier’s offer and the quality of cooperation for compliance with the organization’s needs
- Execute and monitor joint initiatives (projects) with an active supplier
Introduce new technologies (including services, products and components) to the market.
The supplier relationship management system is an important value for the operation of the company. It is also a tool for building positive relationships, which are based primarily on partnerships. Positive ones allow for the selection of the right supplier, effective communication and joint resolution of organizational and technical problems.
Relationships with suppliers are a key element on which the manufacturing sector bases its operations. Examples of industries where it is of key value include the automotive industry or the pharmaceutical industry (pharmacies, drugstores, medical supply chains). This was best demonstrated in the pandemic years, especially 2020, when global supply chain issues of destabilization and rupture emerged.
Why a PRM platform?
The PRM platform is a state-of-the-art tool that not only allows you to collect and analyze data, but also effectively supports you in making better strategic decisions. This applies to each of the business areas of organizations operating with suppliers, as well as in a partner network model.