Supplier enablement is key to cultivating business relationships with your suppliers and raising your return on investment. For the suppliers you work closely with, it’s not sufficient simply to send out invoices and make payments. More complicated vendor relationships require cohesive communication and the right planning to get done right.
If you believe you aren’t getting enough out of your vendors, a robust supplier enablement strategy is the answer. Let’s talk about what such a program would involve and how you can achieve it with the right steps and best practices.
What Is Supplier Enablement?
Supplier enablement is the process of connecting and onboarding chosen suppliers to your electronic systems. It includes strategy development including supplier risk management, analysis, compliance policies, as well as continued education and communication. When attention is given to creating supplier enablement practices, mutually beneficial and longer-lasting supplier relationships are formed.
What are companies doing exactly when they’re deploying supplier enablement programs? Supplier enablement starts by connecting your vendors and trading partners with your supply chain using electronic means, such as:
- Online forms
- XML data files
- Radio-frequency identification
- Electronic Data Interchange (EDI)
- Other E-commerce tools
By connecting with suppliers, you enable direct communication with them and can share critical information about the goods and services you purchase regularly like invoices and purchase orders.
But supplier enablement goes beyond connecting with partners. A company has the opportunity to share technologies and tools and develop materials and business processes to help vendors play a more active role in the success of the partnership. A business that focuses on supplier enablement enjoys many benefits.
- Higher return on investment from suppliers
- A more efficient supply chain and procurement process
- Improved communications and invoice tracking
- Elimination of inefficient or manual processes
We need to transition into what the full supplier enablement process includes and what can be done to take advantage of these benefits.
What Is the Supplier Enablement Process?
Enablement handles every aspect of supplier management, from onboarding to deployment to regular updates and support. A complete strategy for supplier enablement involves several key components.
Building a Foundation For Success
Positive supplier relationships are spearheaded by strong leadership commitments and a focus on business objectives. Supplier enablement is actually important enough that most companies have entire teams dedicated to the supplier enablement strategy. These people have a thorough understanding of the needs of internal stakeholders and can make adjustments to vendors accordingly.
Executive oversight is necessary to determine what the supplier enablement strategy will do and how it plans to accomplish its tasks. The company must establish clearly-defined goals and success metrics at this stage. Regular meetings will also be held to analyze progress and ensure that the strategy is moving forward in the right direction.
The enablement team also needs to develop a model for governance. A checklist, for instance, can detail all the steps of the full supplier enablement process, including key milestones and timelines for delivery.
Maintaining Positive Partnerships
When it comes time to add new third-parties into the supply chain, start with a repeatable and consistent process for onboarding and deploying new vendors.
- Supplier onboarding: A business begins by selecting its suppliers and conducting a supplier onboarding process that gets them acquainted with the internal supply chain network.
- Communication: A large part of enablement is educating and talking with suppliers so that the relationship is more than just a series of invoices being passed back and forth. It’s not uncommon to see businesses offer training sessions and documentation for their vendors at this stage.
- Compliance: Make clear your expectations, deadlines, and general requirements and work out ways to ensure vendors participate in the overall success of the partnership. This way, both sides can work together to resolve issues.
A supplier enablement program is never perfect right out of the gate. A dedication to continual improvement and a focus on change management is necessary for fostering positive vendor relationships in the long-term.
Enabling the Success of Vendor Partnerships
Tips and Best Practices:
Upon onboarding a new supplier, the first step is usually to undergo a test run by processing a few small transactions to ensure that the internal catalog works as expected. During this process, communicate with your vendors, specify due dates for expected deliverables, and track and report your results.
A few best practices for supplier enablement include the following.
- Clean up supplier data: What do you know about your third-party business relationships? Do you have accurate and up-to-date information on them? Is your data free of both inaccuracies and duplicates? If not, then you risk wasting time on your enablement program working with the wrong entities.
- Categorize your vendors: Since many larger projects have thousands of suppliers, vendors must be grouped and prioritized accordingly. Divert most of your attention to the most critical suppliers for best results.
- Don’t skimp on communication: There’s no such thing as overcommunication here. It is paramount to inform your suppliers of any major project changes and updates. That way, they can adapt to changing demands and circumstances with ease.
- Consider a system of rewards and penalties: Gamification can be part of enablement. Emphasize the importance of vendors’ participation in the process by encouraging them to meet deadlines and communicate transparently. Non-compliant vendors must be addressed promptly.
- Provide self-support options: Supplier education has always played a role in enablement. To that end, businesses often generate online documentation for suppliers to reference, occasionally through a dedicated portal.
- Don’t forget about legal compliance: Some jurisdictions have restrictions on how companies can interact with their suppliers. For instance, Mexico requires both PDF and XML file formats, and organizations operating in that country must format their invoices accordingly.
Like many modern business processes, the use of technology plays a huge role in integrating with suppliers electronically. A digital portal for vendors to handle registration and order management is often among the most pressing priorities for supplier enablement programs.
And most of all, don’t treat supplier enablement as a one-time consideration. As new vendors are added to your database and as project requirements change over time, continual optimization is key to enabling more fruitful vendor partnerships.