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C2FO Powers Early Payment Programs for the World’s Largest Companies.
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Supplier relationship management impacts your operations and bottom line. You can strengthen your supply chain by using the right SRM technology and support.
Creating and maintaining a healthy relationship with your suppliers is essential for your business’s success. Long-term connections — built on trust, open communication and respect — can have a significant impact on product quality and production timelines, and lead to greater efficiency, cost savings and even the potential for new opportunities in the future.
But what does it take to cultivate a successful buyer-supplier relationship?
In this post, we’ll explore the importance of supplier relationship management (SRM) and how it benefits your business. We’ll also provide some actionable strategies and solutions you can leverage to develop even stronger working relationships with your suppliers.
Supplier relationship management is the process of developing and managing buyer-supplier relationships. Similar to the way that customer relationship management is intended to streamline customer workflows, the goal of SRM is to establish a mutually beneficial relationship and streamline operations between you and your suppliers. It involves evaluating, strategizing and executing tactics to improve relationships with your suppliers.
Supplier relationship managers are responsible for developing and maintaining the relationship between an organization and its suppliers. Generally, they implement strategies to create value for both businesses. Additionally, supplier relationship managers track and monitor the performance of suppliers to mitigate risk, and work collaboratively with them to overcome challenges and identify opportunities to improve commercial outcomes.
While a great working relationship between buyers and suppliers enables the free flow of feedback and ideas, poor relationships can put your business at risk. If critical supplies, products or services are held up, unavailable or defective, your operations could grind to a halt and you could lose significant revenue. Supplier relationships can affect your business through:
High costs: Both vendor turnover and supply chain failures can cost your organization a lot of money. When you prioritize supplier relationships, however, the chances of service disruptions decrease and you improve your negotiation stance.
Inefficiencies: Slow communication and delayed payments can have a negative effect on your supplier relationships and impact your ability to get new products to market. Strengthening your supplier relationships, such as by investing in tools to streamline payment processes (C2FO’s Early Payment platform, for example), not only makes these processes run smoothly but also can lead to downstream effects, such as faster time to market (TTM) and assured availability.
Business risk: When your business relies on a supply chain, there’s always the risk of product delays, whether as a result of strikes, natural disasters, geopolitical events or poor planning. By keeping supplier relationships strong, you’re more likely to be in the loop if any significant problems occur or if there are changes coming that will impact your business.
Strong buyer and supplier relationships offer financial and operational incentives to both organizations. Benefits might include:
Lower costs: Positive relationships increase the flow of ideas and feedback between companies, which can lead to improved operations and faster go-to-market times, and result in cost savings.
Improved lead times: Keeping communication channels open with your supplier can help you plan for potential delays and circumvent issues, so you can mitigate the risk of shortages and outages.
Higher quality and efficiency: Increased communication and collaboration can enable your teams to develop a better understanding of each other’s operations and goals. This can lead to service improvements, as well as new workflow tactics or procurement approaches, that save time while still ensuring quality production. Further, when issues or problems do arise, the strong relationship between organizations can make it easier to quickly identify and resolve issues.
Preferred buyer status: Constantly changing suppliers is expensive and time-consuming. Long-term relationships built with strategic partners generate long-term value over short-term gains. By maintaining supplier relationships, you can establish a clearer cost base and provide better price visibility.
Opportunities for revenue growth: Improving your supplier relationships can lead to increased revenue for your business and your suppliers. For example, you might collaborate on a joint venture or other new market opportunities with growth potential.
Supplier relationship management is a continuous process that needs to be monitored, managed and improved. Dr. W. Edwards Deming, an author and thought leader on management principles commonly known as the “father of quality,” once said: “You must have a supplier relationship of constant improvement.”
As with any process, conducting regular reviews and identifying ways to improve it is a critical factor for long-term success. The right external support can help you nurture your supplier partnerships and build even stronger and more effective relationships.
For example, if you want to launch an early payment program, you need to educate suppliers and encourage them to adopt the new program. But your procurement team is most likely already extremely busy, and educating suppliers about financing options can be time-consuming. External support can help fill the gaps and free up your team to do other important work. Macy’s is one of many enterprises able to strengthen supplier relationships by using C2FO’s Early Payment platform.
Some buyers have an in-house supplier relationship management business function or strategy for optimizing buyer-supplier partnerships, and possibly a supplier relationship manager to execute that strategy. If your organization is not in a position to implement supplier relationship management at this level, you might instead choose to leverage a software solution or service to facilitate SRM. Here are some options to consider:
SRM software is a supply chain solution that centralizes supplier-related data. It streamlines processes, such as the selection, onboarding and assessment of suppliers. It also helps you manage supplier documents and track supplier performance. Supply chain professionals use SRM software for collaboration, project management, operations and procurement.
An important part of supplier relationship management is having reliable and efficient accounts payable (AP) and accounts receivable (AR) processes for reviewing and approving purchase orders, and negotiating early payment discounts and terms. Automation can transform your AP and AR functions, simplifying cash flow management, and reducing errors and inefficiencies.
Early payment programs such as C2FO’s can help to streamline and optimize these processes while also improving margins and strengthening relationships with your supplier base. In addition, they can be leveraged to segment suppliers and incentivize behaviors such as environmental, social and governance (ESG) practices or diversity, equity and inclusion (DEI) initiatives.
At C2FO, we have had years of experience in optimizing buyer and supplier relationships. We understand that both you and your suppliers need liquidity in your supply chains. We also know that ensuring all the players in your ecosystem have the financing they need to grow can be challenging.
Many companies looking to implement an early payment solution don’t have the resources in place to encourage supplier adoption of a new tool. That’s why we have a dedicated team of supplier relationship managers to onboard your suppliers and help you run your early payment program. With unique insights into market trends and personalized programs, our team of supplier relationship managers will provide additional value for you and your suppliers.
At C2FO, our supplier relationship managers provide continuous support for your most strategic suppliers, driving engagement, loyalty and satisfaction while saving you time and resources. As an extension of your company, our SRM team uses communication, trust and transparency in everything it does — without getting in the way of your valued supplier relationships.
First, our supplier relationship managers identify the right person at your suppliers. Most, if not all, contact data stored in your systems will be with salespeople or AR clerks who do not have the authority to approve an early payment offer. C2FO’s team can reach key decision-makers and explain the benefits of early payment to unique audiences to ensure program efficiency.
We strive to meet your suppliers’ working capital needs by asking the right questions. Whether your suppliers need year-round liquidity to meet operating costs or want a quick boost in capital to drive more growth, our supplier relationship managers seek to understand your customers’ “why” and “when.”
Because plans and needs change, our team is trained to account for the nuances of cash management — from seasonal work to meeting quarterly key performance indicators. Once we understand your suppliers’ needs, we support their ongoing cash management requirements.
Another key strength of C2FO’s program is that our supplier relationship managers can reach all the suppliers within your supply chain. From large multinational companies to micro-businesses, different suppliers are at different stages in their business development. We have created dedicated SRM profiles so that we can approach the financial conversation according to what suppliers need.
Because trust is key to a program’s success, C2FO has invested heavily in our SRM team to build deep-rooted and longstanding relationships with your suppliers. All C2FO supplier relationship managers complete over 70 hours of onboarding training in the first two weeks of employment. The result is that our SRM team has helped C2FO achieve extremely high satisfaction from suppliers.
We believe that artificial intelligence and data mean nothing without human connection and trust. A technology platform on its own will not generate the same success as a robust platform supported by SRM. Currently, we have hundreds of supplier relationship managers. Between them, they speak over 15 languages, including European languages, as well as Russian, Arabic and Chinese.
The important impact supplier relationship management has on the supply chain cannot be stressed enough. Great buyer-supplier relationships can increase efficiency, reduce costs, mitigate risks and create new revenue-generating opportunities for your business. Supplier relationship managers, and the technology platforms, tools and skills they use, can help you build mutually beneficial long-term relationships with your essential suppliers.
The financial tools available on C2FO’s platform can help you optimize your supplier relationships and provide your suppliers with better, faster and more flexible working capital solutions. Moreover, C2FO’s team of supplier relationship managers will provide you with invaluable support — so you can run a successful early payment program that benefits both you and your suppliers.
Learn more about early payment programs from C2FO. Explore our solutions for enterprises.
This article originally published August 2021, and was updated March 2023.
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