Supplier management system is the process of defining the structure of relationships between supplier and consumers. It includes how this relationship will be maintained and developed. It involves setting up standards and making sure these standards are certainly met from time to time. These days, more and more sophisticated and easy-to-use tools for building, executing, expanding and automating supplier management system are available that enhance the entire business system. Supply management is generally regarded as a systematic business process that includes more functions than traditional selling, like managing inventory, coordinating the inbound material, and matching it to the internal production logistics. It is vital that these functions are monitored to ensure business remains in a good interest.
Supply management system primarily deals with the oversight of materials, services and inputs, management of suppliers who provide input in the form of goods and material in the market. Usually the performance of the supply management system is commonly measured in terms of the amount of money saved for the firm or company.
A new term that has come up due to increased globalization is the supply chain compliance. As the business grows, it needs to produce more, and in turn need more raw materials and indirect goods. This may mean increasing the number of suppliers that the business has. This increases the exposure of the business to a number of supplier related risks like material risk, quality risk, ethical risk, social risk etc. Failure of the supply chain means failure for business since it can lead to reputational damage, which no organization can withstand in this viral age. Hence, there arises a need for an effective compliance management software system to be put in place that will assess all the suppliers to your business on the safety parameters and secure the business.
Key benefits of a compliance tool for supplier management are:
- It protects the reputation and brand value of your business.
- Helps to identify loops in the supply chain management and minimize the damage they can cause.
- Monitors the activity of suppliers to ensure they adhere to the objectives set out by the compliance department.
- Ensure that risks are adequately handled and resolved in a cost effective manner.
- Improve the performance. Performance targets need to be based firmly and should trend upwards accordingly. If you have a proper supplier management system in place, the business is more likely to perform better.
Compliance risk management plays an important role in the smooth working of the supplier management system because it supports the confirmation of the rule, like specification policy, law or standard. Corporations work hard to ensure that their employees are aware of the relevant laws and regulations and make the effort to comply to them on a regular basis.
