What are the advantages and opportunities of the digitalisation of customer relations in your procurement process?

Advantages digitalisation of customer relations
Updated on July 11th, 2023
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Managing customer-supplier relationships lies at the heart of any procurement department's mission. In the current climate of heightened tensions, it has even become a key issue for any digital strategy, in order to guarantee that the business operates smoothly and even grows. These relationships should therefore be managed carefully, with a view to mutual development. Digitalisation, and SRM (Supplier Relationship Management) software, in particular, play a decisive role in building such partnerships.

The evolving customer-supplier relationship

Suppliers are often seen as the backbone of any business. It is true that they play a key role in the supply chain as well as in the process of value creation, and this impacts their customers' business.

In recent years, the customer-supplier relationship has evolved considerably to face new challenges. It now tends to be more balanced, transparent and collaborative. Companies today know it is in their interest to foster good relations with their product suppliers and service providers, in order to make a difference in their market. This trend is all the more important in view of successive crises and added social and community-based demands.

As managers of external resources, procurement departments lie at the heart of the customer-supplier relationship management process. Their mission is to assess their suppliers, determine which plays a strategic role in their business, and manage these relationships very carefully.

The most recent survey carried out by PwC also reminds us that sourcing and managing the customer-supplier relationship are high on any procurement team's strategic priorities, second only to cost reduction.

How does digitalising the customer-supplier relationship work?

Communication is the starting point for developing a healthy and lasting relationship with suppliers. This is also why new tools for digitalising customer-supplier relationships, also known as SRM (Supplier Relationship Management) software, have been developed. As such, many companies have already adopted such software, or are planning to do so in the near future.

Just like solutions which optimise customer relationship management (referring here to CRM tools[1]), SRM software makes it possible to manage the entire supplier life cycle against a background of continuous improvement. These tools bring real added value by offering complete, real-time visibility over all ongoing interactions between a company and its suppliers in order to meet and build solid commercial relationships over the long term.

These systems deliver multiple functionalities:

  • Supplier database;
  • Supplier portfolio management;
  • Supplier pre-qualification and assessment system;
  • Dashboard to monitor interactions;
  • Reporting system with monitoring of defined KPIs;
  • Managing invitations to tender;
  • Etc.

The benefits of digitalising the customer-supplier relationship

The impact of digitalisation on the customer-supplier relationship is undisputed. Thanks to having access to secure, standardised information updated in real-time, procurement departments can, above all else, anticipate and control supplier risk.

Furthermore, these new technologies centralise all the supplier data (contracts, certificates, orders, invoices, etc.) and standardise procurement processes (selection, dialogue, assessment, etc.). The entire procurement department consequently shares a common vision of its suppliers and the interaction each business has with them.

In this scenario, every stakeholder has a clearer understanding of their trading partner. This means supplier offers can better match the company's expectations, a key path to informed decisions and greater overall satisfaction (both supplier and procurement department, but also internal customers, too).

As you can see, the digitalisation of the customer-supplier relationship represents a tremendous gain in operational efficiency while strengthening relationships between parties.

Supplier onboarding is a key step

To take full advantage of these customer-supplier relationship management systems, it is vital to win the support of all major parties involved. In this sense, proper integration of suppliers should be carefully managed so that they assimilate these new channels.

First and foremost, it is vital to put together a comprehensive, high-quality database. The first step is to identify and prioritise the information you need to obtain from your suppliers. When it comes to how to do this, most digital technologies tools now form and offer a collaborative approach, where suppliers become responsible for creating and updating digital data which relates to them.

This clears the way for the second step: communication. To persuade suppliers to embrace this new digital tool, it is important to show them the benefits which they themselves might derive from using it. This implies better payment terms, transparency regarding the process for selecting suppliers, opportunities for more orders and greater involvement, and so on. It is also an opportunity to explain clearly and precisely what is expected of them in terms of adopting and working with this tool. Remaining open and available to answer their questions is essential and ensures that the user experience runs as smoothly as possible.

This communication exercise will naturally have to continue over time until this new way of thinking becomes embedded in everyone's daily routine. So dawns a new digital age, with the various supplier networks becoming more motivated and this tool seeing constant improvement.

Digitalising customer-supplier relationships represents a further step towards the digital transformation technology of business. It is now the task of procurement departments to know how to overcome the challenges of digitalisation: integrating the right data, having the necessary skills available, and aligning with corporate strategy. It is by understanding how to enrich the customer-supplier relationship thanks to going digital that the buyer will be able to benefit from smarter management and continuous dialogue with partners, as well as transform into a value creator.

[1] Customer Relationship Management