If you were asked to identify your most valuable asset, you would most likely answer that it is your customers. You would not be wrong; you need your customers in order to survive. However, there is another group that you rely upon for your survival: your suppliers.
It is vital that you maintain a strong connection with your suppliers for three reasons:
- Supply chain sustainability
- Preferred pricing
- Better working capital management
Read on to learn about the important role EDI software has in building and maintaining strong supplier-customer relationships.
A Sustainable Supply Chain
The supply chain links three groups: suppliers, their customers, and the end users who consume the second group’s products or services. Any chain is only as strong as its weakest link, and if there is a problem in the relationship between the supplier and its customer, the end user will not receive products.
EDI software can strengthen the relationship between suppliers and customers. This technology enables both parties to communicate quickly and easily; instead of waiting for phone calls, faxes, or emails, the customer can receive updates from the supplier about shipments automatically.
Obtaining Preferred Pricing
Everyone has to do more with less. To that end, customers try to negotiate for better pricing and payment terms. However, they can only achieve that goal if they have a good relationship with the supplier in the first place. After all, who wants to give a customer better pricing if you do not trust that organization or you are constantly in conflict?
There is a role for EDI software in obtaining preferred pricing. EDI software automates processes, including submitting invoices. That means that the administrative costs associated with processing invoices are lower, so it makes the argument for receiving preferential pricing much stronger.
Better Working Capital Management
In order to stay in business, you must constantly maintain sufficient cash flow to meet operating costs and pay short-term debts. Customers and suppliers are keenly aware of the need to improve their working capital management. When you improve the relationship with your suppliers, both of you benefit; they have more cash at hand, and you get the raw materials you need (which leads to more profits for you).
Where does EDI software come into the picture? It automates the flow of information between suppliers and their customers. This flow of information ensures that shipments get out the door and arrive on time and that invoices are paid by a certain date. When that happens, suppliers can continue selling their raw materials, customers keep buying them, and both parties flourish.
Supplier relationship management is not just an industry buzzword; it is a concept that is vital to supply chain management. You need your supplier to stay in business, just as much as your supplier needs you to survive. EDI software is a crucial part of supplier relationship management; it automates communication and streamlines processes for maximum efficiency. To learn more about how EDI software plays a vital role in your supplier-customer relationship, contact us today.