Modern companies in their eagerness to lead corporate market trends, are increasing their efforts in customer knowledge, leaving aside what the supplier can contribute within their value chains.
The need to reduce time and costs in the process of negotiation and execution with suppliers, points to the buyer being fundamental in the performance of the different spaces of the companies, making the purchasing management process essential and influencing determinant in the price of the product or service that is being offered. This is why every organization must be clear about the importance of maintaining a balance between selling well and buying well.
Customer assessment is now essential for decision making within companies. Information is playing a fundamental role in managing relationships with the end consumer. Obtaining data to achieve a perfect knowledge of the public to which each business is addressed, makes the marketing and sales areas able to anticipate their offers in the launch of products, in addition to achieving excellent segmentation and finally obtaining profitability and loyalty.
The numerous studies on CRM (Customer Relationship Management), finally carried out by companies, help to strengthen a single purpose: the customer. They have wondered what information system does the buyer have in the negotiation process? What tools does he have when facing a supplier? The relationship that exists between supplier - buyer - buyer - supplier is totally asymmetric.
We must start from the premise that in most organizations, the purchasing area is where there is less information. The buyer carries out his work without thinking strategically about reducing time and costs, in addition to obtaining high quality raw materials, because he simply does not have an information system to help him in his process of obtaining data from the marketing area and sales of your company and your suppliers.
The feedback of information within companies, including suppliers, ensures that the product from its conceptualization, has the characteristics desired by the client. But does the buyer know what the seller knows?
For the supplier, the buyer is his client. The supplier knows perfectly what raw materials he offers him, how he offers them, that is, he knows it so well that he knows how to negotiate his products (CRM). The buyer, on the other hand, does not know who his client is and even less does he know what he really needs, not only the supplier, but also the final consumer.
So if there is CRM in companies, why can't VRM (Vendor Relationship Management) exist, if both go hand in hand and ultimately its objective is to obtain profits and benefit for the parties?
The management of the supplier relationship (VRM) is not only limited to obtaining useful information to negotiate prices, it also contains valuable information for the day-to-day management of the replenishment, in addition to allowing the management of indicators during this process. The buyer also achieves a balance between the common benefits, also obtains an adequate inventory management that allows him to sell his products before the deadline set for their payment, and this ultimately contributes to the liquidity and profitability of his company.
So let's see that CRM and VMI have the same applicability, only with different characters, who enter to interact in the final stretch, when a certain product is finished. Operationally, the procedures made for purchases are increasingly complex and frequent. Let's look:
If a company has 100 raw materials, and wants to have less than 15 days of inventory, it will be forced to place at least 100 purchase orders weekly.
Who is able to handle this without the help of a system? Who can handle this on paper, printer, fax, etc…?
Every CRM system allows to receive purchase orders automatically, so every VRM must have a system that allows it to do the same. Organizations with experience in the applicability of VMR (Vendor Relationship Management), give the responsibility of replenishing inventories to the supplier (CPFR) (Collaborative Planning, Forecasting and Replenishment). In this type of program, the manufacturer not only has greater visibility on actual sales but also improves its forecasts by sharing them with the customer.
Colgate-Palmolive, a leading global consumer products company, sells its products in more than 200 countries around the world under internationally known brands such as Colgate, Palmolive, Mennen Speed Stick, Irish Spring, Kolynos, Ajax, Soupline, Suavitel and Fab.
The big problem this company had was to optimize its supply chain in an effective way and with a minimum margin of error.
The organization decided to apply VRM to improve its processes both with its customers and with its suppliers, to solve complex problems related to the exchange of information and the validation of data with external partners and internal divisions.
An organization dedicated to Business Intelligence, such as iGerencia, provided Colgate-Palmolive with a technology platform to meet integration challenges throughout its global community of customers, suppliers and carriers.
Regardless of the size of a company, all must direct their business platform towards the same perspective, the importance of seeing the supplier as an ally integrated into the supply chain.
The solutions are at hand and you must start by establishing close and long-term relationships with a few suppliers, and in this way manage to properly manage business. A good relationship with the supplier is one in which the supplier is committed to helping the buyer improve their product and win orders…
Regardless of the technological platform, the VRM is a closer and economically viable possibility to negotiate and better manage, to obtain excellent results.
"The battle for the customer is not between companies, it is between supply chains"
Suppliers can be a source of ideas about new technologies, materials and processes. Shopping is a way to pass this information on to the appropriate people in the organization.
In addition, good relationships include those in which the buyer is committed to keeping the supplier informed of possible changes to the product and the production schedule.
The quality, the image of the brands, the advertising support, the trajectory and security of the company, the service and advice in the pre- and post-sale period should also be logical considerations that the buyer must assess when analyzing the price and the cost of a product.
All buyers can improve their purchasing management based on feedback with the supplier, on the effectiveness with which it handles information within the internal processes of the company, in addition to being attentive to the guidelines that the sales area makes with with respect to the final consumer.
Knowing how to recognize the value of the brand, the importance of quality, timeliness in delivery, safety and consumer satisfaction will lead the buyer to worry more about having the product than about reaching the lowest billing price.
