Top Challenges in Supplier Relationship Management (SRM)

Without suppliers, most of the business won’t operate. So, like clients and business owners, suppliers are also the crucial people who play a major role in the business operations. An effective business operation starts with the suppliers or vendors. From suppliers, it will get passed to the business and then to the clients. So, if the initial process is done perfectly, the entire business operation will go smoothly. But if any complications or issues arise with the supplier, then it may lead to some serious effects. So, for a smooth business functioning, a better relationship must be maintained between the supplier and the buyer.  

But challenges also arise here. Overcoming those challenges results in smooth supplier relationship management. This blog lists some top challenges in supplier relationship management. Gain a deeper understanding as you read on. 

Everything You Should Know About Supplier Relationship Management  

Before knowing about supplier relationship management, it is crucial to know who the suppliers are.  

Suppliers are the people who provide raw materials, semi-finished goods, or fully finished goods to businesses or clients. The role of suppliers in the supply chain is crucial to proceed with the business processes further.  

Supplier relationship management is the process of managing the suppliers of the business by tracking and managing their performance. Supplier relationship management is a crucial process for building a sturdy relationship between the supplier and the buyer.  

Key Challenges in Supplier Relationship Management  

Challenges are common in a supplier-buyer relationship in a business deal. But if the challenges are overcome, then the remaining process will go in a smooth flow. But if the challenges are not resolved, it makes the whole situation even worse. Below, you can explore the key challenges in supplier relationship management and some effective solutions for them.  

Challenge #1: The crucial challenge in supplier relationship management is the lack of communication between the supplier and the buyer. This unnecessary communication gap results in delayed processes and unsatisfactory outcomes. Proper communication from the supplier allows the buyer to make further business decisions. So, always make sure to confirm that proper communication was made with the suppliers.  

To avoid this communication gap, schedule regular meetings with the suppliers to share regular updates. 

Challenge #2: Sometimes, the buyers do not review the supplier’s performance and their performance status, and deal with them. This may create a challenging situation if the supplier’s performance is low and they don’t have much knowledge about the import and export procedures of the goods.  

To overcome this challenge, it is crucial to cross-verify the supplier’s records, their performance, and work stability. Only after conducting all this research does the buyer sign a contract with them.  

Challenge #3: Sometimes, disruptions may occur between the supplier and buyer relationships. During those periods, the buyer must not immediately jump and agree to a deal with another supplier. Because this act makes the relationship even worse.  

Safeguarding the supplier-buyer relationship to the maximum is the better solution here. A supplier reward programme can be held to encourage the suppliers for better work.  

Challenge # 4: In some cases, the suppliers fail to understand the buyer’s needs. Without understanding the buyer's needs, they cannot supply the required products. So, this may delay the entire process and even cause misunderstandings.  

To solve this issue, some precautionary measures must be taken. The supplier’s team must be given guidance and training to meet the requirements of the buyer.  

Challenge #5: Non-transparency is a crucial factor that damages the relationship between the supplier and the buyer. It also creates misunderstandings and expectation failures.  

To avoid such issues, transparency must be maintained between both parties. For example, in generating purchase orders and invoices, professionalism and transparency can be maintained when they are generated using online invoicing software for small business.  

Overall, a better solution for supplier relationship management is using the supplier management software. With this tool, the supplier's data can be easily managed, and the supplier relationship can be enhanced.