A successful purchasing process depends on good supplier management. It is therefore worth while improving supplier management to achieve better returns. This begins with an essential first step: the creation of a supplier panel, i.e. a database from which an order can be placed. Management software enables you to manage your supplier panel in the blink of an eye, thanks to the centralization and transparency of information. However, this information needs to be made available to internal customers in an intuitive way, in order to streamline supplier orders and facilitate internal procedures. Good supplier panel management optimizes the company’s purchasing process and reduces supplier risks.
As companies have grown, purchasing has led to an accumulation of different referenced suppliers. A multitude of references generates incompressible processing costs. That’s why it’s worth taking a closer look at the role of the supplier panel in simplifying the purchasing process. In this article, you’ll discover the importance of a supplier panel in ensuring smooth order placement, and the (many) benefits that flow from it.
What is a supplier panel?
A supplier panel is a database of referenced and confirmed suppliers with whom a company processes orders, such as the purchase of raw materials. They are classified into various intelligent groupings (strategic suppliers, potential suppliers, suppliers under evaluation, suppliers to be withdrawn and prohibited suppliers), as well as by purchasing family, location or type. To place an order, the company refers to this database, which is managed by the purchasing department, to access the necessary information. In the life of a company, a supplier can be blocked or suspended following a dispute, and it is essential to have this information available.
From a practical point of view, setting up a supplier panel enables all employees to access supplier information and track orders. Properly managed, it is of strategic importance to the company, enabling it to obtain price reductions via contracts and immediate gains in line with general policy. Good supplier panel management can be achieved with a management tool that provides a global view of data and promotes optimal monitoring.
Rules to know about the supplier panel
Before embarking on the creation of a supplier panel, the company must follow strict rules to ensure the regulatory compliance of its suppliers. It is important to check that the suppliers with whom the company engages are in good legal standing. This obligation applies to contracts worth a minimum of 5,000 euros excluding VAT. Once this step has been verified, it’s time to look at the supplier’s policy. A panel created by the company must reflect its identity , and must be made up of suppliers who meet the organization’s needs, and who comply with its general sales conditions and purchasing policy.
It is also important not to have a single supplier for a single purchasing family. Establishing supplier dependency can be a source of risk in the purchasing process. No one is safe from a break in the supply chain or a bankruptcy filing that could threaten the company’s production. What’s more, there’s a risk of missing out on opportunities and innovations from other suppliers on the market. This dependence can be measured using a management indicator: a dependence rate of over 30% represents a risk.
However, care must be taken not to accumulate suppliers, as this represents considerable administrative costs. The risk of duplication, non-transparency of information and the possibility of getting lost in a large flow of data are all situations to be avoided if you are to benefit from an efficient supplier panel. The better the panel, with few but reliable and trustworthy suppliers, the better the ordering process.
A supplier panel also represents an opportunity for the company to classify and monitor the supporting documents supplied by suppliers. A URSSAF document, for example, enables the company wishing to work with the supplier to know whether the latter complies with the company’s CSR policy. The supplier panel makes it easier to select partners according to certain criteria. This is a useful tool for supervising company purchases, ensuring that procedures are respected and preventing orders from being placed with suppliers who have not been checked beforehand.
Build and control your supplier panel
Steps to build a panel
Identify the main characteristics of your suppliers, in particular their service offering, industrial expertise, competitive pricing, production resources and geographical proximity. An audit of suppliers with whom the company has already dealt should be carried out with regard to these elements, leading to the creation of a list of selection criteria. In terms of quality, you also need to know what is available on the market, which explains the supplier sourcing process.
Competitive bid ding is ideal for identifying a strategic supplier who meets the company’s needs, whatever the type of purchase. Indeed, a risky supplier can be put aside and classified as a prohibited supplier, to avoid inconvenience when placing an order.
Selecting strategic suppliers to benefit from the best items, the collection of useful information is necessary to qualify the database. The database contains everything you need to know and respect when placing an order, simplifying the purchasing process and reducing risks. Buyers will save time thanks to direct access to supplier profiles, with ratings, offers and purchase history for each supplier.
The result is an active supplier who has met important constraints and complies with a rational purchasing policy.
How to manage your panel?
Good control of the supplier panel is at the heart of purchasing strategy. In fact, the strategy to be established consists in grouping several suppliers together and isolating the best ones. A good supplier is not the one who responds first to a call for tenders, for example, but rather the one who upholds the same values as the company, with common denominators, and who has a good reputation. Establishing a strategy for the supplier panel helps to improve the company’s purchasing performance.
Thanks to the transparency of exchanges and information via purchasing management software, it is possible to undertake better day-to-day management of supplier relations with dynamic dashboards. Controlling the panel involves monitoring suppliers, in particular to avoid billing disputes that could damage a beneficial business relationship. The Access-based supplier cycle can therefore be easily replaced by a specialized tool such as Weproc. Its objectives are to maintain an objective and strategic view of the market, and to optimize the purchasing function to move towards responsible purchasing.
Supplier performance monitoring
There are a number of supplier management tools available, which also provide a global view of current and past orders, as well as of suppliers and their thousands of part numbers.
A dashboard provides a range of relevant information, including basic concepts such as :
- order volumes
- consumption levels
- latest purchases
- delivery times
- expenditure trends
All this data makes it easier to analyze the supplier purchasing cycle. Tracking suppliers allows you to see whether they are meeting deadlines or complying with pre-established conditions, in which case decisions can be taken with regard to the supplier concerned.
Supplier performance evaluation
Before working with a new supplier, it is important to compare the company’s strategy with that of the supplier. It’s important to ensure that suppliers meet the company’s requirements and needs. An effort must therefore be made to assess the strategies of both stakeholders. This is a key element in the management of the supplier panel and in the choice of a strategic supplier.
To this end, an analysis of the supplier’s evolution must be carried out. Performance that is acceptable one day can deteriorate in the following weeks, hence the importance of focusing on changes. Better knowledge of suppliers can also facilitate supplier panel management, with regular site audits for example. The aim is to understand the company’s strategy, organization and economic activity, in order to identify supplier opportunities and risks.
Once a supplier portfolio exists, purchasing department staff, especially buyers, need to update it regularly to ensure it remains relevant. This makes it possible to sort out the remaining suppliers and decide whether or not to make a change.
Evaluating suppliers is a way of managing supplier risk. This step is therefore useful for improving operational performance, as a risky supplier can have harmful consequences on the production chain. This step should not be neglected. Supplier analysis and evaluations are reliable indicators of stakeholder involvement. A lasting, high-performance partnership can be maintained through transparent exchanges between the company and the supplier. Interests are common to both sides. Supplier satisfaction is also important, to avoid breach of contract, for example.
Digitizing supplier management
The idea of optimizing supplier management with digital technology can represent a growth lever for the company. Adopting purchasing management software is therefore the solution. All interactions with suppliers can be accessed in a single place, with the possibility of knowing all the data the company needs to make decisions.
But why digitize supplier management? Quite simply, to anticipate risks thanks to improved supplier monitoring. Indeed, without the regular, real-time monitoring offered by purchasing management software, it’s difficult for a company to take stock of the process and anticipate risks. What’s more, a digital version of supplier management is often synonymous with automation, and therefore data reliability.
The use of a management tool has proved its worth inimproving communication with suppliers and internal customers. Firstly, to monitor and improve product specificity, but also to streamline exchanges and speed up order placement. Thanks to digitalization, exchanges with suppliers are transparent and fluid, whatever the type of purchase. Internally too, supplier information is transparent and readily available, speeding up decision-making. The process becomes more efficient with good supplier relations.
Control of external processes carried out by suppliers represents a strategic lever that can be used to achieve better product quality. Digitalization brings many benefits: stability for suppliers and the company thanks to shared interests, satisfaction for internal customers, better cost control, reduced risks and time savings on processes.
Simplify supplier management with purchasing software like Weproc. With its dashboards, you can track your orders in real time and manage your supplier panel! Optimize your panel management directly on the tool for better results, and drastically reduce your administrative costs.
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Weproc is a SaaS software specialized in digitizing the procurement process of companies. From purchase requests to supplier invoicing, through the validation process, Weproc is designed to simplify the purchase management of SMEs and mid-sized companies by centralizing all purchase-related activities.