Executive Briefings

There Are Several Good Reasons Why You Need a Network to Match You with Suppliers

Matchmaking is only one function that supplier networks perform, and for some companies it may not be the most important one.

For example, companies can use such networks to rein in ad-hoc buying by employees from unapproved vendors and improve their so-called spend-under-management. Some studies suggest the percentage of spend captured by companies using supplier networks is 75 percent as opposed to 63 percent by companies not using them. That means there's less maverick spending.

Supplier networks can also lower a company's "cost of poor quality," the expense associated with purchasing sub par stuff. That cost is 7 percent for companies using networks, says Aberdeen, versus 10 percent for other companies. Still another metric improved by networks is on-time delivery: 77 percent for companies that use them, 69 percent for companies that don't.

Some believe a network's greatest value lies in its ability to create a web of business partnerships. On the network, for instance, you can see a supplier's capabilities, reputation and financial stability.

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Matchmaking is only one function that supplier networks perform, and for some companies it may not be the most important one.

For example, companies can use such networks to rein in ad-hoc buying by employees from unapproved vendors and improve their so-called spend-under-management. Some studies suggest the percentage of spend captured by companies using supplier networks is 75 percent as opposed to 63 percent by companies not using them. That means there's less maverick spending.

Supplier networks can also lower a company's "cost of poor quality," the expense associated with purchasing sub par stuff. That cost is 7 percent for companies using networks, says Aberdeen, versus 10 percent for other companies. Still another metric improved by networks is on-time delivery: 77 percent for companies that use them, 69 percent for companies that don't.

Some believe a network's greatest value lies in its ability to create a web of business partnerships. On the network, for instance, you can see a supplier's capabilities, reputation and financial stability.

Read Full Article