The Role of Data in Supplier Management

Companies across industries are increasingly depending on their supply chains to improve product and service quality, keep costs in check, and mitigate risks. As a result, supplier relationships—the beating hearts of a healthy supply chain—are becoming an area of amplified management focus. When the buyer/supplier partnership is a source of both operational and financial win-wins, the end customer wins as well—and isn’t that the ultimate goal?

Today, data is driving innovation in supplier relationship management. Companies are generating (and likely sitting on) large amounts of data just waiting to be crunched into actionable insights. While there is data all along the supply chain that executives are learning to leverage, it’s the data collected through electronic payment transactions that can support more strategic supplier partnerships and impact the “wins” each party is working to achieve.

Data: From the POS to the Back Office

In a retail environment, electronic payments are helping companies, particularly SMBs, more efficiently manage cash flow and serve customers. That’s because financial data collected at the point of sale helps paints a picture of financial health—in real-time—and boosts the back office’s understanding of customer behaviors and preferences. This helps them keep shelves stocked with the right products and staff the floor and checkout lines with salespeople.

Retailers have the opportunity to do so much more with the data, however. In addition to uncovering areas in need of operational optimization, data can be used to cultivate more satisfied suppliers and, ultimately, stronger partnerships. Optimizing B2B Payments Decisions Via B2C Payments Data on PYMNTS.com, in fact, cites research from Askuity finding that 77% of brands that sell in at least one national retailer say they believe they could be doing more with their own POS data to improve their business—and that includes how to deal with their business partners.

“Dealing” with business partners just might require sharing data. In the article Note to Suppliers and Buyers, Select the Right Data and Share It with Each Other, software analytics company, ClientLoyalty, suggests that suppliers and buyers automate and centralize a subset of data both partners can access. For suppliers, this data can be used to improve day-to-day experiences and manage performance outcomes, achieve higher levels of client satisfaction and engagement, and realize increased client retention and spend per client. And for buyers, it can help reduce service level risk and avoid switching costs, create transparent and accountable performance that is data-driven, and foster a culture of continuous improvement, development and innovation.

For related insights, read How the Right Data Can Improve Aggregation and Negotiation in Procurement.

Digital Payments Provide the Richest Insights

Even outside of a retail environment, payments data is becoming a particularly critical piece of the buyer/supplier relationship equation—and electronic payments deliver so much more information to both parties than cash, checks, and other traditional payment types. According to Tradeshift in What We Can Learn From B2B Payment Data, “data is one of the most valued pieces of information that exists within a payment,” from “who is being paid, for what, when, how, what currency is being used, what bank is housing the transaction, what bank account, etc.”

End-to-end digital processes, in fact, enable more efficient and cost-effective tracking, while helping to keep both parties “in check.” This is discussed in PYMNTS.com’s How Data Gets To The Bottom Line Of Buyer-Supplier Ties, with the following example: “Particularly in the B2B world, if there is debate about the quality of a service, [the buyer] can slow down payment.” Digital payment methods do the heavy lifting and provide the data that’s necessary for taking advantage of early payment discounts, facilitating efficient cross-border payments, and, from the get-go, developing an appropriate payments mix for each supplier.

Putting Virtual Payments In the Mix

There are multiple benefits to making B2B payments with virtual card numbers. The data attached to each transaction gives the utmost visibility into spending and results in smoother reconciliation and reporting. It’s also more detailed than what’s provided through even ACH and wire transfer: parties on both sides of the virtual payment process gets invaluable information about each transaction, including product codes, quantities, descriptions, and even tax information. Read 5 Reasons Your Suppliers Love To Receive Virtual Payments for more.

With data becoming central to the buyer/supplier relationship, digital payments are essentially a must-have in today’s B2B payments environment. Hard numbers are doing more than helping to ensure deliveries get made on time or informing decisions regarding early-payment discounts. Payments data is valuable because it’s shared by both buyers and suppliers and can be used to optimize processes that impact each partner’s success—and helps the end-user, the customer, have a better experience with the product and service they take up to the register.