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Tangata Think Tank

Why every purchasing department needs a CRM platform

The last two years' supply chain disruptions and challenges are well documented. Ask any supply chain or purchasing professional, and they will reflect that their job has never been more challenging. With near-constant sourcing for substitutes and replacements, tracking back ordered items and shipping delays, and preserving margin in the face of inflation, category managers and purchasers constantly communicate with potential and existing suppliers. And while their challenges have evolved, for many, their tools have not. Despite advancements in supply change technology and automation, and digitization of transactional information across the supply chain, purchasing departments are still managing vendor relationships in the same way they have for years – through email, phone, and occasionally chat. Furthermore, as back-office teams, such as accounts payable and receivable workers, have moved to and stayed remote, many organizations have struggled to get a 360-degree view of their supplier relationships when it has never been more critical to have these insights.

Fortunately, one solution is straightforward and may already be in place at your organization. CRMs, or contact relationship management solutions, have been used for decades by marketing, accounts receivable, and service teams to get a holistic view of the customer relationship. There is a high likelihood that your vendors are using a CRM to manage and monitor your communications, issues, and behavior – so why aren't you doing the same?

The barrier is often internal organizational structures, not technical or financial issues. If your company has a CRM, it is likely owned by the marketing or sales organization or occasionally a customer service function. Internal silos and IT organizations focused on functional, not holistic solutions haven't identified this cross-over platform need or provided a cross-functional solution. Organizations looking to use their CRM to manage any "C"ontact – not just "C"ustomers – often find a high degree of existing customization for sales or service teams that makes cross-utilization for vendors, and partners, or even employees impossible. Too narrow of a focus during implementation may have closed the door to innovation and adaptation.

Regardless of where your organization is at – without a CRM, with a CRM purchasing can't use, or with a CRM that is ready and waiting for use with vendors – as a supply chain professional, it's time to take the same approach to manage your suppliers as they do in managing you as a customer. Getting started might feel daunting, but here are a couple of key considerations when selecting and implementing a CRM to improve your vendor relationship management:

  1. Where will vendor data, specifically individual contacts, come from? Many organizations have good data in their supply chain or financial management systems around vendor company data. Still, individual contact information can be elusive to aggregate – one of the key reasons you need a CRM – and is a barrier to implementation. Talk with purchasing, operations, and finance about where (and it may be just in their email inbox) the most reliable contact information is and start aggregating now. This contact data is the fuel for driving efficiency and automation in supplier relationships.

  2. It isn't just purchasing that needs to be able to use the CRM or interact relationally with suppliers. Operations or functions serviced by suppliers and your accounts payable team will need to be part of the solution if you want an accurate 360-degree view of your interactions with a supplier. Be sure you understand how these other groups manage interactions with suppliers today and their pain points to be addressed with a CRM.

  3. What transactional data and information are frequently referenced in your relational interactions, such as contracts, purchase orders, invoices, or payments? Suppose you find that a sizable part of your supplier communications is referencing product numbers on purchase orders or pricing on invoices and contracts. In that case, you will want a CRM that can seamlessly integrate transactional data with your relational interactions, creating efficiency and accuracy in your communications.

  4. Do you communicate only 1:1 with suppliers, or will you also need to send information in mass? This is important when considering CRMs, as not all have a group (i.e., marketing) email or messaging capabilities. How often you issue RFPs, solicit bids, or communicate changes with all vendors will determine how important this feature is in your selection. Does information that helps suppliers work with you change often, or is it static? Consider the exchange of non-transactional information and if vendor landing pages (web pages linked from email) or email campaigns might be used.

  5. What other information are you tracking in spreadsheets or outside your core systems about vendors? Are the accounts payable team checking the receipt of statements and completion of reconciliations of vendor accounts in excel? Are operational teams tracking returns, damaged goods, or other issues on binders of packing lists? How many problems with a given supplier are you watching via flagged email at any one time? Do you know how long it takes to resolve an issue with a supplier, receive a requested credit, or how many times a vendor has changed their billing information? Some CRMs have native ticketing solutions or can integrate with other ticketing platforms. In any case, you will want a CRM that allows you to aggregate interaction data, ideally in an automated way.

  6. Are your purchasing and accounts payable departments flooded with phone calls, emails to generic accounts, and messages that have multiple recipients who end up working on the same item? Would online chat or inbox management capabilities be helpful? Many CRMs allow you to converge channels like phone, chat, email, and social media into one place for teams to work. Additionally, understanding how long it takes to resolve emails or requests can help you eliminate internal bottlenecks that might be adding to your supply chain woes.

In all likelihood, you aren't leveraging the same or comparable contact management tools with your suppliers that you are using with your customers. In that case, you may be missing essential insights or creating hold-ups in your supply chain. Implementing a CRM for vendor relationship management can create internal efficiencies and insights to help you overcome a number of challenges.

At Tangata, we've worked with several organizations to streamline supplier management using a CRM platform, like HubSpot.

Contact us today for a free consultation to assess the readiness of your current CRMs for managing vendor relationships or start your technology assessment process for a CRM that will address gaps in your supplier management processes.

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