What is SRM (Supplier Relationship Management) software?
According to research from Bain and Company, external purchasing is the largest single expense category for many businesses - averaging 43% of total costs. It should go without saying, then, that maintaining a strong relationship with suppliers is integral to running your business. That’s especially true for merchants and distributors.
However, whilst management of customer relationships is recognised as an essential process for most businesses, supplier relationships are frequently neglected. Unfortunately, this can have real consequences for your business.
If you’re concerned about your supplier relationships and you want to keep them in check, then it might be time to invest in supplier relationship management (SRM) software. In this post, we’ll explain how SRM software works – and why it’s so important for your business.
What is SRM software – and why is it important?
First, it’s important to have a clear understanding of what supplier relationship management entails. According to Gartner, SRM refers to a “business initiative that many companies undertake to build mutually beneficial relationships with suppliers”. In other words, supplier relationship management systemises relationship building with suppliers. This helps to improve collaboration and efficiency, reduce costs and mitigate risks. It also ensures your business is working with the best suppliers.
SRM software provides a set of digital tools for analysing and managing supplier relationships on one streamlined platform. Supplier relationship management shouldn’t be conducted in a vacuum. Purchasing teams will generally use SRM tools as part of a broader, integrated ERP software. This will include other important business management tools, including stock control and financing.
There are a variety of different key features within SRM software that can be used to streamline your supplier management processes…
What are the key features of SRM software?
So, what can SRM software do for your business? Software will naturally vary depending on the specific program, but ERP (enterprise resource planning) software, like OGL’s Profit4, contains a variety of useful supplier management tools, including…
View and maintain supplier data
The backbone of an SRM system is supplier information. With an ERP, you can view and manage historic and current supplier data within a streamlined dashboard. This includes…
- Contact information – Including email, website addresses and phone numbers.
- Primary contact details – You’ll also have clear information about the supplier’s primary contact, including their name, email and phone number.
- Credit control – This includes your credit limit and overdue balance (if applicable) with the supplier.
- Payment information – Here you’ll find details such as your payment terms and the date of the last transaction.
- Purchases – You can view the total costs of outstanding orders in this section.
- Communications – View any communications, tasks or events related to the supplier.
With Profit4, you can drill into your supplier’s information in further detail, including outstanding orders. You’ll also be able to save an unlimited number of contacts for each supplier. Having access to this wealth of information in one streamlined location gives you and your team a birds-eye view of everything you need to know about your suppliers.
Import supplier prices and images
When it comes to supplier relationship management, admin tasks can often take up valuable time. That’s another area where ERP software can lend a helping hand. Supplier prices can change at the drop of a hat, so you need to be able to update them regularly.
With Profit4, for example, you can quickly upload supplier pricing in bulk via an Excel spreadsheet. These changes will take effect immediately – plus, you can use our reporting tools to view the impact on your profits on both a micro and macro level.
You’ll also be able to upload supplier product photos in bulk and export them for use on your website. These quick and simple processes can save you immeasurable time - and money.
Manage communications and events
Supplier relationships are maintained through strong communication. That can be a challenge when your supplier information is all over the place. SRM software can help by streamlining your communications and events into one space. Your team will be able to quickly view any upcoming events, tasks or relevant communications exactly when they need them.
Integrate with purchasing and stock control
Profit4 makes raising purchases quick and easy. While you’re viewing your supplier’s dashboard, you’ll be able to raise an order with just a few clicks. If a customer requires a direct delivery or back-to-back delivery, there’s also the option to arrange these.
Automating purchases is also simple, so you can fully integrate your supplier management with stock control. In turn, this means fewer stockouts and quicker fulfilment of customer orders.
3 main benefits of SRM software
Improved supplier relationships
SRM software makes managing supplier relationships simple. Conflicts with suppliers often occur through issues such as poor communication, delayed payments and reductions in performance. SRM reduces the likelihood these issues will arise – and helps to resolve the ones that do.
For example, if your team is losing track of meetings with a supplier, this could sour the relationship and reduce the potential for discounts and fast-track orders. With Profit4, you’ll have a clear overview of future events and meetings with suppliers – so your team won’t lose touch.
From bulk uploads of supplier pricing lists to automatic purchasing, SRM software ensures that lengthy admin tasks are cut down to size. With an integrated approach, your purchasing, warehouse and sales teams will all be on the same page when it comes to supplier relationships.
As external purchasing takes up such a huge percentage of company expenses, it’s important to reduce costs wherever possible. SRM software can help your business to make major savings in the long run, as you find the best suppliers, build strong relationships with them, and automate your purchasing processes.
Build strong supplier relationships with Profit4
From cost reductions to risk mitigation, developing strong relationships with your suppliers can make a huge impact on your business. While SRM software is helpful, you need an approach that integrates supplier management with purchasing, stock control and sales, along with your other departments.
That’s where our Cloud-based ERP software, Profit4, comes in. With streamlined supplier information and automated purchasing, Profit4 offers all the tools you need to stay on top of supplier relationships.