Any company relies on its suppliers to get goods, supplies and services that help run the business. But when you have several suppliers, a lot of things need to be done including getting information about the suppliers, their capabilities evaluation, registration management, compliance verification and business relationship management. These things become really challenging without some proper planning.

That is when SAP Supplier Management comes into play. This solution enables companies to organize all information related to suppliers and improve the process of working with external business partners. This concept is important for those who want to learn SAP procurement solutions.

What Is SAP Supplier Management?

What Is SAP Supplier Management? This is the processes and SAP enabled capability used to handle supplier data, onboarding, qualifying, evaluation, and managing the relationship with the supplier.

Supplier management involves having proper supplier data, knowing about the capabilities of the supplier and making sure that the suppliers are able to meet the needs of the organisation even when carrying out business.

There are various capabilities that SAP offers to enable the management of the supplier management process. Examples of such capabilities include SAP Business Network and SAP Ariba where they have collaboration and supplier lifecycle management.

This will depend on what SAP solutions the organisation uses.

Why is Supplier Management important for Businesses?

Supplier management is not only about managing a list of suppliers but understanding whom the organisation works with and whether the suppliers can meet their business needs.

The supplier management process ensures that businesses achieve a number of business goals:

• Supplier Visibility: The procurement department will be able to get relevant information about the supplier and their business relationship.
• Supplier Selection: The capabilities of the supplier, their experience and suitability for the engagement will be known to the business.
• Risk Management: Information about the supplier and supplier qualification process helps in identifying business risks.
• Supplier Relationship: Communication and information organisation will help in having a good supplier relationship.
• Procurement Efficiencies: Standardisation of the process can reduce administrative efforts.

This becomes very significant for businesses operating with many suppliers in different locations.

Components of SAP Supplier Management

Supplier management entails some activities in the entire supplier management life cycle. These components include:

1. Supplier Information Management

Supplier information is very important in procurement activities. In general, organizations keep information such as supplier names, addresses, contact details, tax information, banking information, categories of business among other documents.

The use of SAP to manage supplier activities helps in keeping supplier information and its use in various business activities. The availability of supplier information will depend on the software used.

2. Supplier Onboarding

Onboarding of suppliers is a process whereby a supplier is registered with all the information needed to form a business relationship.

These activities may include registration forms, company information, tax information, banking information among others.

Using SAP supplier management activities makes it possible to automate the registration of suppliers.

3. Supplier Qualification

Not all suppliers qualify in meeting all the business requirements. In supplier qualification, the organizations are able to determine whether the supplier qualifies in meeting certain requirements.

The criteria used might include the following;

• Industry experience and technical know-how.
• Financial stability and business credentials.
• Quality criteria and production capacity.
• Regulations and compliance standards.
• Any certification available.

Based on the results of the assessment, the organizations will be able to determine whether the supplier qualifies based on organizational qualifications.

4. Supplier Evaluation and Performance Assessment

The evaluation of the suppliers enables organizations to measure the performance of the suppliers in meeting the set expectations. The organizations can measure their performance based on delivery, quality, pricing, and regulations.

The performance information is very useful for procurement professionals in making good procurement decisions.

5. Supplier Collaboration

It is necessary to note that communication between organizations and suppliers helps in conducting efficient procurement processes. It includes sharing information, responding and processing business documents and conducting the procurement process.

The SAP solutions provide digital collaboration capabilities for procurement professionals to work with suppliers efficiently.

How does SAP support Supplier Management?

There are several SAP solutions which help the organizations in managing the supplier management process.

Some of these solutions are SAP Ariba Supplier Lifecycle and Performance which helps in managing the process of supplier registration, supplier qualification, supplier segmentation, and supplier performance management.

SAP Business Network is another product which facilitates collaboration between the buyers and suppliers as well as the exchange of procurement documents.

SAP S/4HANA is the product that helps in managing the supplier master data in order to manage the supplier information which is used in procurement and billing processes, among others.

These SAP solutions may be integrated according to the specific SAP landscape of the organization. But not all processes of supplier management can be managed through any SAP solution.

Common Obstacles in Supplier Management

Organizations may encounter many obstacles in managing their suppliers by using disconnected systems or through manual systems.

• Lack of updated supplier information.
• Delayed supplier registration and verification.
• Problems in validating the supplier’s documentation.
• Lack of visibility in the performance of the supplier.
• Inconsistencies in the qualification process.
• Communication barriers between the procurement team and the suppliers.

By following a systematic process using SAP, organizations can overcome these problems.

Learn SAP Supplier Management from Prompt Edify

SAP Supplier Management Knowledge is important for those associated with procurement and supply chain and other SAP experts and novices who wish to learn supplier management techniques.

Prompt Edify provides training programs for SAP that will assist the learners in getting knowledge of SAP solutions, procurement process and business process. Check out the available SAP training courses to increase your knowledge of supplier management and procurement process.