What Is Supplier Relationship Management

What Is Supplier Relationship Management

Ask any seasoned business veteran: business has more to do with building and maintaining relationships than with profits, revenues, or sales. Regardless of the company’s size or its particular industry, its continued existence rests squarely on the quality of its relationships. That is why companies invest small fortunes in developing and maintaining extensive customer information databases. That is why executives wine-and-dine executives from other enterprises during crucial deal negotiations. Moreover, that is why companies are beginning to see an increasing need for supplier relationship management – especially since businesses continue to increase the percentage of independent contractors that comprise their workforce.

It used to be that managing supplier relationships was largely the purview of the procurement department. If manufacturing needed a shipment of raw materials or parts to complete an order in progress – call the procurement department. They then went through their Rolodex of suppliers and called two or three to get competitive price quotes. Soon the folks on the assembly floor had the materials and parts they needed, and the accounting department had another invoice to process.

Businesses today still depend on the expertise of the procurement department to acquire the necessary parts and materials at the lowest prices, in the most expedient manner. However, obtaining a shipment of parts and materials requires a far different set of expertise than finding, attracting, and onboarding the necessary number of flexible, on-demand, independent workers ideally suited for the immediate tasks at hand.

Traditionally, fulfilling the labor and expertise needs of the company would fall within the purview of the human relations department. Their expertise is in recruiting, hiring, and managing long-term business talent. Also, HR manages employee benefits, compensation packages, training, and other considerations the company offers to employees. Contingent workers, on the other hand, are by definition non-employees.

Contingent workers are a unique element in the company’s supply chain. Unique because they simultaneously fulfill two distinct roles. They are, on the one hand, the supply of short-term, on-demand labor, experience, and expertise the company needs to get specific projects done efficiently – rather like a truckload of materials and parts the assembly line workers need to fulfill a particular order. On the other hand, contingent workers are simultaneously the suppliers of the contingent labor. They negotiate the terms of the services to be delivered and then provide those services – rather like the company that provides the truckload of materials and parts for the assembly line workers.

Supplier relationship management is a unique solution for the unique relationship companies have with their contingent workforce. Regarding managing a company’s contingent workforce, a supplier relationship management platform provides

  • Streamlined processes for the enterprise to find the contingent workers with the right qualifications for the task at hand, thereby ensuring shorter time-to-earnings for the contingent worker and faster time-to-onboarding for the hiring company;
  • Data management features which allow the hiring company to track the work and results of each contingent worker, and similar data management for contingent workers to allow for the tracking of work done and resulting earnings from each hiring company; and
  • Smooth payment systems that provide for the efficient payment of earned income from the hiring company and the corresponding direct deposit of the earning into the contingent worker’s bank account.

Today’s supplier relationship management platforms provide a hybrid of traditional procurement and HR functions, expressly developed for the unique and growing needs of companies utilizing contingent workers in today’s gig economy.