The supplier relationship has long been unbalanced, between an “Almighty” customer imposing his will, processes, deadlines and a supplier with no choice but to comply. This finding is reinforced when we know that 25% of business bankruptcies are due to late payments. However, between technological and legislative developments, the supplier relationship is more strategic than ever and its quality has become much more than a formality: it is now a real competitive advantage.
Major challenges of the supplier relationship
1. Better knowledge of suppliers to create value
A supplier relationship must be considered in the long term, and the company must therefore ensure the reliability of its future suppliers. To do this, the traditional selection criteria "Cost / Quality / Delivery" are no longer sufficient: it is now a question of having a better knowledge through the KYS (Know Your Supplier) procedure, which facilitates the evaluation of partners. The implementation of SRM (Supplier Relationship Management) functions is therefore necessary in the context of sourcing and calls for tender, as it offers customers and suppliers a collaborative space in which information is collected and verified upstream.
2. Establish a partnership relationship with strategic suppliers
To ensure the stability of these relationships, it is necessary to establish not only a favourable environment, but also the rules and conditions of collaboration that will benefit both the company and its suppliers.
Many companies reward the most deserving suppliers, through events, annual meetings or even key supplier associations... Creating visibility for the supplier by establishing a privileged relationship has a direct effect on improving performance, ensuring both financial gain and competitiveness.
The challenge also lies in the company's ability to facilitate communication with its suppliers, in particular by making effective collaborative tools available. The use of digitalization solutions can contribute to this collaboration, in particular the implementation of a supplier portal that will facilitate the management of documents, but also that of disputes. Suppliers can thus view and consult the follow-up of their invoices, and even enter and file them directly online. This has two advantages for accounting teams: not only does it save time (51% of companies believe that handling disputes and the time spent resolving them is the main issue in supplier relations), but it also improves the traceability of documents, for greater transparency and quicker, more efficient and less costly processing.
3. Integrate the supplier relationship into the company’s CSR policy
CSR (Corporate Social Responsibility) is now one of the main criteria for improving the value of a brand, demonstrating the growing awareness of the importance of integrating social responsibility into the global strategy of companies. Social and environmental responsibility represents an economic challenge for companies, in a context where consumers are increasingly concerned about societal practices. Existing laws help to guide companies in this direction.
Compliance with payment deadlines is an integral part of a company's CSR: The implementation of digitalization solutions offers the possibility of accelerating the payment of supplier invoices, automating up to 100% of the invoice processing, streamlining and monitoring the processing and validation status of invoices in real time, from their receipt to their actual payment.
However, despite the implementation of regulations, payment delays remain long, leading to the establishment and application of sanctions.
To remain profitable and competitive in their market, companies need to know their suppliers better before engaging with them, create a partnership relationship with strategic suppliers and integrate this relationship into the company's CSR policy. The implementation of a supplier portal and a Supplier Relationship Management (SRM) system can effectively respond to these three major challenges of the supplier relationship.
2. Obligation of vigilance and compliance
For each of these issues, due diligence and compliance require particular attention. Indeed, risk management is a key factor in engaging a supplier in a strategic and sustainable manner. Supplier analysis should be part of the company's risk management and compliance system, in order to identify potential risks related to partners (fraud, corruption, etc.), which allows better control of the supplier relationship from the outset.
As mentioned above, the notion of KYS (Know Your Supplier) implies having a certain amount of information and documents for each of its suppliers.
The question of compliance with the various regulations is also an important point because today, the company must be fully assured of the reliability of its future suppliers. With a quality supplier base and digitised information gathering procedures in place, the company can - and should - verify the identity of its suppliers in order to better manage the risks of fraud, corruption and concealed labour. It must also be able to prove that it has carried out these checks.
Coupled with the digitalisation and automation of invoice processing, the implementation of a supplier portal with SRM functions therefore meets the major challenges of supplier relations: better knowledge of suppliers, more collaborative relations, traceability of exchanges, but also additional productivity gains. These actions make it possible to turn the supplier relationship into a performance lever and to benefit the entire organisation.
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