“Error. Please contact our information technology department for assistance.”
Most businesses understand that this familiar online message will cause immediate, negative reactions from customers. However, they may not be as attuned to the potential harm a similar error message can cause when the recipient is a supplier. A negative supplier response can reduce efficiency and affect delivery and production schedules, ultimately damaging an essential relationship and the company’s bottom line.
Across a range of industries, corporate purchasing and supply chain managers are seeking new efficiencies and cost savings by implementing business process-management (BPM) software systems that enable suppliers to interact directly with the purchasers’ internal systems. As they do so, there are a number of policies and practices that can help minimize online problems and ensure success—building profitability for purchasers and suppliers.
A typical BPM software system replaces conventional purchasing processes with a paperless, interactive, online exchange of purchasing, delivery and payment information. Instead of a paper or e-mail exchange of purchase orders, order acknowledgments, delivery receipts, invoices and payment receipts, the system directly links the purchaser’s internal BPM system to the supplier’s system. It is task/workflow-based, automatically directing the purchaser and supplier through the purchasing process, ensuring that each step is followed in the proper order and providing documentation to both parties as each step is completed.
Benefits for purchasers…
At first glance, most of the benefits of an interactive BPM software system appear to accrue to the purchaser, who saves time and money by eliminating redundant data-entry work.
But in fact, such a system can create efficiencies that lead to providing better service to the purchaser’s customers by passing along cost savings and delivering the finished products or services more quickly.
In addition, an interactive BPM software system can provide transparency to the purchaser’s customers by enabling them to track purchasing progress throughout the supply chain—through multiple layers of suppliers in some cases. By eliminating re-entry of data, it also reduces or eliminates opportunities for errors and helps ensure order accuracy. And it can play a positive role in green initiatives by reducing the need for paper purchase orders, invoices and receipts.
… and for Suppliers
The benefits of an interactive BPM software system extend to suppliers as well. Because all information—purchase order, order receipt, pricing, delivery, etc.—is entered into the system only once, accuracy is enhanced substantially. These time-saving efficiencies make it easier for suppliers to meet the terms of demanding service level agreements.
Such a system automatically generates records to confirm the supplier has met all terms for delivery of products or services, minimizing or even eliminating misunderstandings that can strain a business relationship. And it can contribute to suppliers’ green initiatives, just as it does to purchasers.’
Potential stumbling blocks
However, the full benefits of an interactive BPM software system aren’t guaranteed. Successful implementation requires investments of a purchaser’s time, capital and talent. While the potential advantages are clear, this upfront and ongoing investment can be seen as a deterrent, especially in tight economic times.
There’s a danger, too, in viewing technology as a cure-all. In fact, as the all-too-common “error” message referenced earlier demonstrates, technology has its limits. Occasional glitches are inevitable and can sometimes harm business interactions and relationships.
Finally, interactive software systems, by their nature, tend to reduce opportunities for personal interactions between purchasers and suppliers. Those relationships are always important, regardless of the products or services involved, and purchasers must take care not to let automated systems inhibit these essential bonds between people and companies.
Steps toward success
There are a number of proactive steps a purchaser can take to make the implementation of an interactive BPM software system a success—or to improve the efficiency of an existing system.
- Begin with a plan. As mentioned earlier, it is essential to realize that online interactivity with suppliers is not an end in itself, but a tool for improving efficiency and customer service. Planning with this fact in mind can help a purchaser set reasonable expectations for the system and its benefits. Similarly, the justification and design of the system must include budgeting for the long-term costs of operation, including ongoing investment in technology and staffing.
- Be positive in presenting the system to suppliers. The advantages of an interactive BPM software system for the supplier may not be apparent at first. It is up to the purchaser to demonstrate how the supplier can benefit from the efficiencies, transparency and reporting capabilities the system offers.
- Provide thorough, ongoing supplier training. This training must be considered an essential element in the startup and ongoing system investment. For suppliers to use the system effectively, their personnel must be comfortable and confident in it. This requires thorough initial training for current suppliers and new ones brought on board. It also calls for a commitment to ongoing training for suppliers’ new hires and for all users as the system is updated over time.
- Provide timely, supplier-oriented IT support. As with training, ongoing support is essential to system success. Be sure the right people are in place to respond to supplier questions or problems, and that they are equipped with the knowledge and tools necessary to assist suppliers with individual needs.
- Maintain a balance of technology and people. Remember that technology is a tool for improving service, not an end in itself. Knowledgeable purchasing professionals are still required to maintain valuable personal relationships with suppliers and to step in immediately whenever the situation requires it.
- Invite ongoing supplier feedback. A proactive approach to feedback is an excellent tool for maintaining supplier relationships, and an important way of ensuring the ongoing success and improvement of the system. Invite suppliers, individually or through supplier forums, to share their experiences with other purchasers. This shared experience can contribute immeasurably toward keeping a system up to date with best practices in the purchasing field.
Direct purchaser/supplier interaction through a BPM software system offers efficiencies and cost savings to both parties. Thorough planning, ongoing supplier support and continuing attention to the value of supplier relationships can bring those benefits to life—and ultimately save time and money for the end customer.
Gloria Newman is Director, National Accounts, CORT Business Services and Tracey Gatlin is Manager, Global Supply Chain, SIRVA, Inc.