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Supplier management — All the ins and outs

Supplier management is all about carefully choosing the best suppliers, negotiating contracts, and monitoring performance to ensure the collaboration meets or exceeds your expectations.

June 28, 2024
11 min read
Ioana Neamt

Ioana Neamt

Contributing Writer

Have you ever ridden a bicycle?

We’ll assume that you have. But, even if you’re among the roughly 10% of adults all around the world who haven’t, don’t worry! You’ll still understand the supplier management analogy we’re going to use throughout this article.

What is supplier management, exactly?

Supplier management is basically a fancy way of saying how a certain company finds, chooses, and works with the business that provides them with the stuff they need to make their products.

Now, here’s that analogy.

Imagine a company that manufactures bicycles. Like every other manufacturing company in the world, they need suppliers — suppliers that provide various bicycle parts like wheels, seats, frames, and handlebars. Now, supplier management is the process that said company goes through. The process of not only finding the best supplier for those parts and making sure that everything is delivered on time (and at a good price), but also working together to solve any problems that may come up during that very same process.

What the experts say — why is it important?

There are several reasons why a supplier management system is important:

  • By relying on suppliers that deliver high-quality materials and components, a manufacturing company maintains consistent product quality. On the other hand, relying on a supplier that provides parts of sub-bar quality can lead to defects, recalls, and most importantly, customer dissatisfaction.
  • It reduces costs. If a company manages its supplies effectively, it can also negotiate better pricing. Not only that, but that same (bicycle) company can also streamline procurement processes and avoid certain disruptions that can lead to some additional (and unexpected) costs.
  • Improving supply chain agility, as strong supplier relationships, oftentimes means being able to adapt to changing market demands.
  • Mitigating risks, aka identifying and addressing potential risks such as supply shortages and quality-related issues.
  • Boosting innovation and leveraging the expertise and capabilities of strategic suppliers in both product development and new technologies.

The benefits of supplier management

If you understood the part about the importance of supplier management, we’re almost certain you’re already starting to see the benefits. If not, again, here are some examples that should give you a somewhat better insight into how our fake bicycle company can improve its business by using a certain supplier management system — it’s quite simple, actually.

  • The bicycle company increases its profitability by reducing costs, improving product quality, and creating an efficient procurement process.
  • A satisfied customer is the best customer. Manufacturing quality bicycles, delivering them on time, and listening to what the customer has to say about potential improvements all lead to creating an even stronger chain that helps the company grow. The stronger the chain, the stronger the company.
  • By collaborating and openly communicating with all parties involved, both the supplier and the company build a strong relationship that benefits them in the long term.

Supplier management challenges

Before anyone learns how to ride a bike, the challenges become quite obvious to them. There’s the fear of falling down and getting injured, the uncertainty of which bicycle to pick, and, well, of course, keeping balance on two thin rubber circles.

Challenges come in many shapes and forms, but for a company that strategizes efficiently, there should be no issues with:

  • The fact that globalized supply chains can sometimes involve a large number of suppliers across not only different countries but, in many cases, also different continents. All that makes communication and coordination challenging — Different time zones and oftentimes a language barrier, even in a modern world where practically everyone speaks English to some extent.
  • Data management — These types of issues revolve around collecting, storing, and analyzing supplier data in an effective manner. That’s why it’s quite important for a company (still a bicycle one) to try and implement the daily use of supplier management software — something like Katana.
  • And finally, integrating the aforementioned supplier management software and making sure that everyone in the chain is keeping up with current technology trends can be difficult.

Manage your suppliers with Katana

Katana Cloud Inventory Platform gives you a 360 view of your entire business, from inventory to sales to production. Book a demo and see how Katana can benefit you.

Key features of effective supplier management

While there are many different key features that relate to effective supplier relationship management, we’ll try our best to focus only on the most important ones.

The first one is the supplier selection process — a well-defined process for identifying and qualifying potential suppliers based on clear criteria. This means that a good (bicycle) company will do a quick screening process with potential suppliers. 

This is no different from a scenario where a client is looking for a good freelancer. They also need to check various aspects like job history, recommendations, and the freelancer’s portfolio to find the best one for the job.

Another key feature here would be supplier onboarding. This is a fancy term for saying that a company has a streamlined process for integrating new suppliers into its operations.

There’s also performance management, which represents regular monitoring of supplier performance through defined metrics and KPIs (key performance indicators), along with performance reviews and feedback mechanisms.

Some other notable key features here would be:

  • Contract management
  • Collaboration and communication
  • Continuous improvement
  • Technology utilization

The best supplier management software

While there are many options to choose from when it comes to selecting supplier management software, some do it better than others. So, let’s go over some of the best options out there.


Katana is a cloud-based inventory platform that unifies all your business tools. It offers seamless integration with the best business apps out there, including QuickBooks Online, Xero, Shopify, and WooCommerce. Katana gives you a complete overview of your entire business, making it easy to manage everything on the go. It offers:

SAP Ariba

SAP Ariba could be seen as a giant online toolbox for managing everything you buy for your business. From finding the best suppliers to keeping track of how well they perform. 

Here’s what SAP Ariba can help you do:

  • Find the perfect supplier
  • Keep track of everything
  • See how your suppliers do
  • Save money


Supplier relationship management is something that ProcureWare excels at. To keep everything short and simple, here’s what ProcureWare offers:

  • Easy sign-ups
  • Moving information and documents around easily
  • Getting the best deals
  • Comparing different suppliers side by side
  • Keeping track of agreements

When your main focus is on supplier relationship management, choosing the right platform is the first step. Of course, you can’t make that big of a mistake when choosing any aforementioned option, as the main ingredient here is yourself and your business strategy.

How to boost supplier management efficiency with Katana

Some of the terms we mentioned in this article might seem like bland corporate-sounding language, but simply put, Katana is the most efficient tool you can find online. It doesn’t really matter if you’re just starting your own business or if you’re an experienced entrepreneur. Katana helps its users regardless of the level they’re on.

If we go back to the bicycle analogy one more time, it’s easy to see why Katana is one of the best options out there.

Imagine investing in a bicycle that you can ride both in the streets, but also in off-road environments. Imagine being able to completely rely on your tires, the chain, or the disc brakes without even slightly worrying about those parts falling apart right after buying your new bike. 

That’s what makes Katana stand out: the reliability, the efficiency, and the versatility. Three words that are not necessarily synonymous with many other supplier management platforms online. 

Request a demo of Katana today and find out for yourself why there are thousands of satisfied companies all over the world who use this platform as their preferred supplier management tool on a daily basis.

Ioana Neamt

Ioana Neamt

Contributing Writer
With more than 10 years of copywriting experience, Ioana has a fondness for longform writing, investigative journalism, cats, and Victorian-style mansions.

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