The role of technology in managing suppliers


Larger businesses or small businesses with complex production processes are likely to find technology a useful ally in managing their relationships with suppliers.

Numerous software tools that are available on the market can help lower inventory costs (e.g. through automated monitoring of inventory levels); facilitate collaboration between the business and various suppliers (e.g. by supporting communication through web-based platforms); and allow for real-time tracking of shipments.

Business owners can also try out electronic data integration, which directly links computer systems between a business and its trusted suppliers. This can improve contract management, turnaround times, and understanding of each other’s operating models.

Other benefits of supplier relationship management software include less employee time spent on administrative tasks since most of them are either automated or simplified by the software (e.g. invoicing, reconciliation and settlement).

Businesses also save on the costs of printing and document storage due to the reduced volume of paperwork. The centralisation of spend data allows the business to monitor trends in purchasing behaviour and to synchronise with other aspects of the business (e.g. pricing and income) to provide a holistic picture of the business.

Regardless of the benefits of technology, top of mind for many small business owners is, ‘What is this going to cost me?’ The expense includes not only the software, but also its accompanying hardware (some of which may be highly specialised) and any staff training that may be required.

Small business owners can conduct a quick cost-benefit analysis, deciding for themselves whether the business can continue to function effectively on labour-intensive administrative process, or if it is worth investing in new technologies to make life easier. An important consideration is whether suppliers are also willing to evolve their own systems and practices in line with the business.

To truly the reap the benefits of SRM software, the technology of a business and its supplier should be on par. Unilateral decisions by small business owners can end up being wasteful as sophisticated capabilities go unused due to suppliers sticking to more conventional and traditional practices.

Post By: Fadzai Munyaradzi  


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