In e-commerce, supplier relationships can provide sustainability and efficiency as well as disrupt processes. Considering the high level of competition in the growing e-commerce market, how suppliers perceive the company is critical. Buyers can find what they want on any site in this competitive environment. For this reason, the procurement processes of the products affect the competition and the future of the e-commerce site or company. Because supplier management has a direct impact on product inventory and pricing.
What is Supplier Management?
Suppliers are independent legal entities. Organizations that sell another organization’s own goods and services. Supplier management is a process that ensures that an organization gets value for the money it spends on its suppliers. It enables the organization to manage its relations with suppliers and the risks associated with these relationships. Ultimately, the supplier management process is the most effective way to reduce companies’ risks associated with suppliers.
Importance of Supplier Management in E-Commerce
In the e-commerce ecosystem, millions of products at different quality levels are offered by suppliers. Suppliers are a “must-have” factor for e-commerce, making things faster and easier. In this respect, it is important for e-commerce companies to continuously offer products and services to their customers. Efficiency between relationships benefits both parties.
Large companies make significant investments in supplier management. According to a survey in the “Supplier Management Report” published by “PayStream Advisors” in 2016, “managing suppliers” was among the biggest goals of businesses with an income of $ 100 million to $ 500 million. When evaluated from this point of view, ignoring the supplier management of e-commerce companies invites unpredictable situations and low quality services.
Regardless of the industry, suppliers potentially have a significant impact on the quality of services provided to the end customer. In other words, companies engaged in commercial activities have to work regularly with suppliers to increase their performance.
While suppliers not only provide goods and services that organizations need to be productive and profitable, they also involve numerous risks. To minimize these risks, e-commerce companies’ corporate supplier management strategies should be based on a clear policy that defines how suppliers are involved and managed. These policies allow to measure the services of suppliers and evaluate them in the context of measurements.
Supplier Management Platforms
Supplier management platforms enable the management of product data provided by suppliers and business partners. These platforms work in integration with companies’ internal processes and systems related to suppliers. Serving as a bridge between predefined suppliers and commercial institutions, supplier management platforms also provide online integration for e-commerce companies.
On the supplier platform, suppliers can update product and payment information and add invoices. The process usually takes place directly between the company and the supplier. Companies can follow and manage their suppliers with a defined supplier ecosystem. Conducting business processes through a transparent and secure supplier platform provides speed and efficiency to e-commerce companies.
Disruption of data processes related to products leads to inefficiencies within the organization. For this reason, supplier management platforms have an important function. The platform relates product data managed separately in physical and digital channels with different processes.
Things to Consider in Supplier Management
Suppliers provide goods and services in accordance with the expectations of e-commerce companies. Organizations that plan and carry out supplier management according to defined processes and limits are more likely to receive timely, predictable, high-quality goods and services from their suppliers.
For an effective supplier management, the following factors should be considered;
- Strategies and policies should be developed for supplier management.
- Legal agreements between e-commerce or purchasing organizations and suppliers need to be negotiated and fully agreed upon.
- It is important that contracts with suppliers are detailed in line with business needs.
- Objectives in contracts with suppliers must be consistent with the goals set by the purchasing (e-commerce company) organization.
- Relations with suppliers should be evaluated within the framework of managing overall supplier performance.
- Keeping supplier records and information accurate is an important item in supplier performance management processes.
- It is necessary to pay suppliers on time. Otherwise, supplier relations or supplier management are at risk. Also, late payments may increase the cost of goods and services.
- There should be constant communication between an e-commerce company and its suppliers. Communication is vital to supplier management. Lack of communication negatively affects inventory and availability.