“An organization is only as good at what it does with its worst supplier.” This is what he writes in SRM study 2023 State of Flux, one of the market leaders in supply chain consulting.
Moreover, “worst” does not necessarily mean that the supplier regularly defaults on its obligations and fails to meet quality, volume and deadlines. Errors can occur on either side of the interaction, because people work with supplies. And people, as you know, can miss something, or misunderstand something.
Some of the problems on your side can be “cured” by hiring additional managers and redistributing the workload. But scaling the procurement department is not always the best solution to the accumulated problems. In this article, KT.team experts will talk about clear signals that it is time for the company to automate interaction with suppliers using the supplier portal.
What is a supplier portal?
In short and simplified, a minimum supplier portal is a combination of a messenger and a task manager designed exclusively for interacting with suppliers. The portal has two sides: the supplier and the purchasing department.
The supplier registers on the portal, submits documents, offers nomenclature and reports on all changes in items in its product range. In his personal account, he can see all the documents and files that he has transferred and their status. Has the partner received data, approved the application, etc. In addition, he also sees the movement of his goods: what was delivered and when, whether there were any complaints and which ones.
The purchasing manager sees in his personal account what information should be processed, received or transferred to the relevant systems. At the same time, the supplier portal does not replace the procurement process, but only digitizes part of it — with stages, their maximum allowable duration, statuses, and responsible ones.
The statuses of each event become manageable and understandable, and each stage of document processing gets a finite duration.
For example, a manager must process updated prices for a supplier's assortment within 24 hours. And if he does not make it in time, the manager receives an appropriate notification.
Basically, you can do the same thing via email, but...
But the manager's email is usually full of letters. Business communication, clarifications, requests for information, status changes, newsletters, educational newsletters, spam — dozens of emails and hundreds of messenger messages come in a day. It's easy to get confused in this flow of information and even easier to miss something.
The supplier portal concentrates targeted information, separates it from social communication and makes it more controlled.
The supplier portal can be developed: integrate it with the company's systems (for example, WMS or ERP), introduce additional features, customize reports to make management and strategic decisions on procurement organization.
The supplier portal will be useful for retailers, manufacturing and construction companies, pharmacy chains, regional administrations — organizations in almost any field whose activities involve regular purchases.
How much does it cost to implement a supplier portal?
Like any IT product, the cost of developing a supplier portal depends on several factors:
- whether you need to develop from scratch or whether the portal will be based on a boxed product (for example, Magento);
- what features should be implemented already at the MVP stage, and which ones will appear later;
- what systems should the portal be integrated with.
Therefore, it is possible to say exactly how much development will cost to a penny only after an individual assessment. But the starting amount for the most basic set of functions is from 5 million rubles.
Now it's definitely time: 3 signs
It is clear that no business is ready to pay five million (or fifty if you need to close a large number of functions) without confidence that the introduction of an IT product will bring value. Self-diagnosis on three points will help to avoid pointless development costs.
- You are losing money due to untimely updates of prices for goods, components, and materials.
How does this happen?
- The retail purchasing manager did not receive or update the supplier's prices on time. As a result, retail continues to sell goods at the old price, which is close to the purchase price and does not provide a minimum margin.
- The manufacturer changed the selling prices for stainless steel to 1.4025 (the grade is given as an example), but due to late notification, the plant's selling prices for products made of this steel were close to cost.
The reasons for such situations are most often found in the communication field. For example, the manager missed the email because he was busy “putting out fires” in other urgent purchases. Or an unreadable file came in. Or the upload of the file with the new prices to the company's systems was interrupted, and the manager in the park did not double-check it. There can be many reasons, the result is the same — lost profits.
- You get negative feedback from customers: the product actually does not look the same as in an online store.
Imagine: a buyer ordered car wipers in a transparent blister and received wipers in a blue plastic box. Naturally, this will raise questions for him: is this the right product? Didn't they send me a cheaper alternative? Or maybe it's even fake? Although the product is the same, the manufacturer just changed the packaging.
Another case: it's already mid-March, and your online store still has photos of chocolates in Christmas packaging. From the customer's point of view, you're selling a stale item that is about to expire — although in fact, the New Year's batch ended long ago, and you have boxes in stock that were made a couple of weeks ago.
Actual photos for the online store were either not requested from the supplier, or simply did not have time to upload them to the e-comm-platform yet. But the buyer will not understand such subtleties — either he will not buy a “stale” product, or he will leave a review of a maximum of three stars “they sent me not what I ordered”.
As part of the interaction on the supplier portal, partners can promptly inform the retailer about the update of content related to the product. And the integration of such a portal with the DAM system allows retailer managers to seamlessly embed new media files into any external sites and ecom-platforms in a couple of clicks.
- You are regularly faced with out-of-sync in procurement, logistics and production
The wording is rather vague. In practice, however, this desynchronization may result in:
- an important order from a manufacturing company was under threat. The purchasing department ordered smaller containers, fasteners with the wrong pitch, or insufficient bearings to manufacture products;
- the first batch of goods from the supplier cannot be placed in stock. The car has already arrived, but logistics do not have enough data to accept it. There is no information about the size of the package, the free space in the warehouse, and storage conditions.
With a supplier portal, the likelihood of such situations is significantly reduced. All requirements for material, quantity, characteristics, and storage are collected in a single window. And if there is a shortage of data, you can send a request to the supplier — he will receive a notification with a high priority, which will speed up the resolution of the issue.
What other factors might signal that you should consider implementing a supplier portal?
- You work with more than 10 to 20 active suppliers.
- Three or more managers interact with each supplier (as part of a single purchase or during the life cycle).
- One (or all) of the three situations above have been repeated several times in the past few months.
How does the business benefit from implementing a supplier portal?
1. Purchases are easier to organize
Supplier portal automates the process of creating purchase orders, taking into account the retailer's limits. This excludes lengthy coordination of supply volumes. Automation also eliminates the possibility of human error.
2. Purchasing is easier to manage
Purchasing automation makes the process more transparent: the history of relations with the supplier is easy to track. If any manager drops out of the workflow, any of the requirements (for materials, components, and placement in stock) will change — you won't have to manually rebuild relationships with each supplier separately.
3. There is no risk of depending on a single supplier
Automating work with suppliers makes it possible to increase their number without compromising the efficiency of business processes. The more potential suppliers, the wider the choice of products and the more profitable offers. It is easier for you to choose a supplier with more favorable conditions, terms, fewer defects, etc.
4. It is easier to predict purchases
Automated work with suppliers allows a retailer to easily and effectively build long-term relationships with them and get more complete information about the current capabilities of a particular supplier. Therefore, predict its potential in the future and take this into account when planning the range.
5. Easier to manage product content
Product specifications and photos are created once by managers and then loaded automatically when you click on a specific product. Purchasing managers can redistribute their time and focus on processing suppliers' offers to expand the range. Content management can be further simplified by using a PIM system as the basis for the supplier portal. So, for example, we did implementation fot Fix Price network →: this company's supplier portal is based on Pimcore→.
Did you find out in the article the problems that your purchasing or production departments face? Contact our supplier portal implementation expert.
