Supplier management in retail: why is it so important?

Answer this question: as a retail company, do you have a good relationship with your suppliers? If you've gotten this far, you probably believe your answer is no, or that you're not quite sure how to answer it yet. Don't worry, this is the right place to learn everything about supplier management in retail .

Ultimately, there are several factors that explain the importance of maintaining good management and relationships with suppliers. 

Business success today is defined by relationships. And for the retail sector , this is also a reality. Every company is in the middle of a chain of relationships formed by suppliers and customers: it acquires products and services on one side, adds value to generate profit on the other, all revolving around financial operations .

That's why we're going to explain everything about the importance of supplier management in retail, what's essential at this stage, and which tools can help in this process. Check it out!

Why is supplier management so important in retail?

Beyond the obvious importance of a good relationship with your business partners, supplier management in retail is also essential to ensure the productivity of your finance department .

This is because one of the biggest challenges faced by the accounts payable team when processes are uncertain or highly manual is the constant demand from suppliers, who need to request information at all times.

The absence of automated processes that allow suppliers access to up-to-date information, such as an overview of all invoices with expected payment dates and applied discounts, directly impacts business productivity, which ends up wasting a lot of time on excessive phone calls and email responses .

Similarly, when the finance department has difficulty controlling cash flow and having an overview of future payments, there is a risk of financial debts arising that could have been easily avoided with a less bureaucratic and automated process.

4 tips for supplier management in retail

1. Define a communication flow

In any management process, communication helps create transparency on both sides of the channel and avoid errors, such as incorrect counting upon receipt of orders or the issue of missing products in purchase orders.

To develop communication in the best possible way, it is necessary to establish channels and a structure that facilitates effective communication . Creating innovative ways to further strengthen the relationship, using shared tools, can be one option.

It's worth contacting your suppliers and scheduling a time to map out what's working well and what isn't.

2. Map out flaws and optimize processes

Identifying weaknesses and areas for improvement is essential to increasing productivity in retail . Enabling your accounts payable team to extend payment terms and optimize cash flow is a significant advantage.

How much time is being wasted due to a lack of clear processes and the performance of repetitive tasks that could be automated? 

Identify the bottlenecks and act in a way that facilitates the achievement of your business objectives and goals. 

Visualizing processes and information also contributes positively to enabling everyone to track the progress of requests, hence the importance of having management software that provides all the necessary and integrated information for making assertive decisions.

3. Evaluate your relationship with suppliers strategically

It's also important to evaluate the performance of your suppliers and verify if this partnership is truly beneficial for your business. 

Pay attention to price competitiveness and more favorable payment terms

It is important to assess how partner suppliers are impacting finances, as well as other sectors involved in this relationship, in order to always make the most strategic decisions for business growth.

• Are the prices fair and competitive?
• Could the payment terms be improved?
• Are deadlines being met properly?
• Is the communication clear and effective?

4. Rely on technology to automate processes in your retail business

As we mentioned, supplier management goes beyond nurturing a good relationship with your partners; it's also crucial for enabling the finance department to operate at a high level and deliver the expected results. 

Do you use any technology to automate supplier management in your retail business and streamline the finance department's routine?

With Sky.Simple, you automate and centralize all issued accounts payable on a single screen, guaranteeing your suppliers up-to-date information on each invoice in real time , which greatly simplifies your management process.

Take your supplier relationship further by offering options through the Sky.Simple Supplier Portal to help both parties become more efficient and achieve better cash flow.

Learn more about this solution:

https://www.youtube.com/watch?v=YcROtbZ817A&t=7s

Learn more about Sky.Simple here !

Written by Skyone