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3 Reasons Understanding Your Suppliers Better Will Benefit Your Sourcing

Supplier relationships are your new competitive advantage

All businesses face extraordinary challenges in 2020. The fallout from an ongoing COVID-19 pandemic has put financial pressure on companies, resulting in cost-cutting across the board. In addition, the epidemic has severely disrupted supply chains. When critical raw materials and components are unavailable or in short supply, prices rise, and output falls off. Even when a product is in demand, a business that’s working around challenges with its suppliers is often unable to take advantage of the opportunity.

While all businesses and organizations feel the cost-cutting pressure, supply chain disruption puts the sourcing team in a unique position. There is a chance to modernize the way sourcing professionals source and negotiate. This accomplishes the goal of cutting costs, while also implementing technology that strengthens supplier relationship management (SRM) capabilities, minimizing the risk of future disruption.

Earlier this year, a study published by The Hackett Group found that corporate leadership is now on board and ready to spend:

“Historically, procurement’s major challenges have been funding and resource inadequacies as well as a lack of commitment from enterprise executives for transformation. But those are not as pressing issues today.”

What are corporate leaders hoping to see as a result of investing in their sourcing teams? The Hackett Group’s research identified five areas that are considered critical credibility gaps that need to be addressed in 2020: 

“Improving procurement’s agility; becoming a trusted advisor to the business; aligning skills and talent with business needs; modernizing application platforms, and improving analytical and reporting capabilities.”

Choosing the right sourcing enablement software will accomplish these goals, satisfying those requirements. However, the right tool will also help your organization to understand its suppliers better. This is key to a healthy, strategic, supplier relationship and benefits your sourcing in three key ways.

Pricing and Value Advantages

When you establish a real relationship with a supplier, they feel more like a partner in your business. To get there, you need to go beyond a purely financial transaction-based model. You need to be open to listening to their comments and concerns while filling them in on new developments with your company. New products, new processes, special promotions—being in the loop makes a supplier feel almost like they are a part of your business. As part of this process, the information flow is two-way. You’ll learn more about their business, including their opportunities and challenges.

The payoff here is a stronger relationship that will pay off with pricing and value advantages. A supplier who feels you have an interest in their business and who feels invested in your business is more likely to offer their best pricing. Value also comes into the equation, and this can be even more important than reduced pricing. A high-value supplier can reduce your costs or improve your business in other ways by providing you with superior service, for instance.

A Better Understanding of Risk

Relying on a supplier always carries a degree of risk. Will they deliver on time? Is their business in good financial shape? Is their quality control at the needed level? Do they have experience in manufacturing the part you need? Is their location in a stable area, or is it subject to environmental or geopolitical disruption? 

Suppliers can be located anywhere in the world. And much of what you know about them is based on their marketing material. It’s not very likely that you can simply walk over to their office, have a tour of the facility, and examine their records for the past decade. When you develop an understanding of your supplier, you also get an accurate picture of the risks involved in working with them. From there, you can make strategic decisions, including whether to seek a different supplier or whether steps can be taken to eliminate or reduce a risk factor.

Establish Strategic, Long-Term Supplier Relationships

To develop a detailed and ongoing understanding of your suppliers requires two-way communication. This ongoing communication—keeping each other up to date on any new developments and responding to any questions or issues—will go a long way toward establishing a strategic, long-term supplier relationship. It’s a forward-thinking approach that’s all about planning, being prepared, and seamless delivery.

The alternative is a reactive supplier relationship, where you are constantly putting out fires and switching suppliers in search of one that can be trusted to deliver.   

While your company’s senior leadership may not have flagged “understanding your suppliers better” as a critical area of focus for 2020, the fact remains that supplier relationship management is an essential factor to your success. That’s why Arkestro should be on the top of your list of strategic sourcing software solutions.

Arkestro checks all the boxes, including vastly improved analytical and reporting features. It also offers cutting edge artificial intelligence features like automated negotiations. Arkestro is also designed with deep supplier relationship management support. All buying organization stakeholders can communicate directly with each other in real-time. Suppliers can use Arkestro to communicate directly with the buying organization. The risk of e-mails going sideways is eliminated.

There’s no other strategic sourcing software that enables your sourcing team to better understand their suppliers. This is always a competitive advantage, but as the pandemic has shown, a strong supplier relationship can also mean the difference between continuing to operate and facing lost business because of supply chain disruption.

Find out why Sourcing Enablement with Arkestro is a good fit for your team.

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

2022 Gartner® Hype Cycle™
for Procurement and Sourcing
includes Arkestro.

2022 Gartner® Hype Cycle™ for Procurement and Sourcing includes Arkestro.

Gartner® Hype Cycle™ are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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