Supplier management in the Cloud – looking beyond EDI

Many businesses still see the primary benefits of digitisation in the optimisation of existing processes to increase efficiency and consequently to reduce costs. With regard to supplier management, EDI (Electronic Data Interchange) integration is often viewed as an “excuse” for not having to deal with digital transformation more intensely. However, this approach disregards the many opportunities that Business Cloud services can offer to create real added value for a company.

Innovation partnerships instead of process optimisation via EDI

Since large suppliers usually account for the greatest share of the goods and services ordered, optimising supplier processes has important leverage on the reduction of costs. However, integrating a company’s ERP system via EDI has a drawback – it usually can only be achieved with larger suppliers whose software tools also support EDI. Smaller suppliers need to manually create a suitable data format, may not even be accepted as possible suppliers, or communication with them has to be carried out via email or even via fax. Any comprehensive supplier evaluation – as it is required in the course of ISO 9001 certification, for example – must therefore consider a great number of sources, which makes it a very time-consuming process.

Establishing suppliers as innovation partners

A supplier’s quality should not only be measured by costs, delivery reliability and the complaint rate of his goods. Generally, suppliers deliver their goods to various businesses of the same industry and therefore hold valuable information on the requirements of their customers and markets, the type of problems that may occur and an outlook on future requirements. By establishing their suppliers as innovation partners instead of only seeing them as the producers of goods and services, businesses can use this know-how for their own organisations – far beyond standardised relationships via EDI. In an environment like this, smaller suppliers are often particularly well equipped to take on the role of an innovation partner, even though they may not be able to offer an EDI interface. Businesses should not miss out on this potential.

Comprehensive supplier management in the Cloud

Small and medium-sized suppliers can easily be linked to your ERP system via a Cloud solution and EDI. Orders can for example be placed via a form upon which the respective EDI format is created automatically. It is equally possible to upload a document which is then used to automatically extract metadata that is converted into an EDI format. These workflows can be set up to manage order processing with suppliers of any size via a central system. Evaluations and comprehensive supplier assessments are available at the push of a button.

Looking beyond EDI

Cloud solutions can also be used in other areas that support, automate and evaluate communication with the supplier beyond order processes, for example within the context of complaint handling, annual price negotiations, information on current product specifications or the further development of products. Cloud solutions such as the Fabasoft Cloud support the purchasing department in adhering to deadlines through workflows that can be defined to start at a specific time for processes such as annual price negotiations.

Suppliers hence become a part of your extended digital organisation. The Cloud can be used to send information on product updates and updated data sheets to all suppliers, and automated workflows can be set up in a way to require confirmation that they have read the product update. Data and documents are therefore managed across the boundaries of organisations on the basis of a Cloud solution that stores all communication in a tamper-proof and fully traceable manner.

Establishing successful development partnerships in the Cloud

Besides providing the means to optimise supplier processes dealing directly with procurement, Cloud solutions can also be used for product development projects that turn a supplier into an innovation and development partner. Documents and processes pertaining to further development are organised in protected project areas while continuous logging allows to trace who accessed what document, when and on which end device, and what was modified. Genuine end-to-end encryption safeguards your valuable company know-how. If the business relationship with a supplier is terminated, the respective data can be deleted remotely, which represents a considerable improvement of control over sensitive company data as compared to collaboration via email.