John Burson  edited Tuesday, August 5, 2025

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Supplier Relationship management for procurement challenges

Adoption of a strategic approach to managing procurement processes has led to faster bidding procedures, improved order fulfillment, and reduced procurement costs. The process of customer order acquisition and other supporting documents has also improved significantly with the SRM.

The food, pharmaceutical, and natural resource manufacturing companies understand the importance of procurement in reducing short-term costs and for strategic management. Procurement involves the translation of the supplier requirements, the management of the supplier relationships, and the ordering of goods and services required for production.

Manufacturing companies view supplier relationship management (SRM) as one of the key improvements in the manufacturing industry. Strategic supplier relationships are crucial for a company's growth and its ability to stay competitive in the business world. Therefore, manufacturing companies collaborate with various suppliers to enhance their competitive edge and innovation practices, while also improving their procurement processes.

Procurement Challenges

Integration of enterprise content management tools with the SRM tools helps in the development of solutions that assist in solving procurement problems. Some of the challenges that most businesses face during procurement include:

A lot of Paperwork and Documents

Internal procurement processes involve a lot of paperwork and large amounts of documents stored in incompatible files, systems, and formats. The paperwork aids in the planning, placement, and tracking of orders. Additionally, documentation is proof that an order meets the original set of requirements. Companies should aim to eliminate all this paperwork to improve their manufacturing processes.

Lack of a Standard Approach to Information Management

External supplier management merges the manufacturer's operations with their supply chain. The two have diverse ways of managing their information, leading to a high level of inefficiency in business. Eliminating paperwork contributes to a shift in attention from document management to the information contained within it.

Treatment of Suppliers Equally

Segmenting suppliers depending on their roles and values goes a long way in maintaining external supplier relationships. Different suppliers range from the transactional suppliers who rely on specific contract requirements to the collaborative suppliers who focus on risk reduction and delivery of just-in-time inventories.

Squeezed Manufacturing Margins

Production and the number of modern manufacturers working with a wide range of suppliers are growing every day. However, there is an increased tendency to cut prices for the consumers, which in turn leads to squeezed manufacturing margins. Companies are now switching to SRM to help in maintaining the efficiency and profitability of the business.

Sophisticated Supplier Sales Systems

Sales systems of the supplier organizations have a certain form of uneven sophistication with those of the manufacturing organization. The result of this unevenness is a decrease in manufacturers’ buying power.

Benefits of SRM Systems

Most businesses and companies have tried to solve the challenges by adopting SRM systems. The system has helped in cost reductions, increased efficiency, supply chain consolidation, improved manufacturing processes, and the increased ability to outsource various specific activities.

 
 
 

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