Nowadays, many e-commerce companies like to pursue the number of suppliers, but do not attach importance to long-term cooperation with suppliers, so that supplier management becomes supply management. Why is this? The reason is that if e-commerce companies can choose from multiple suppliers at the same time, they can not only ensure the continuity of supply, but also reduce procurement costs in the competition among suppliers, and even control suppliers by allocating procurement quantities.
This way of ignoring long-term interests and trading only based on current interests has no cost planning and strategic layout, and lacks supply logic design and transaction process optimization. It only regards suppliers as sources of goods, and it is difficult to give full play to the value of suppliers. At the same time, if e-commerce companies do not reach a long-term and stable cooperation with suppliers, it will be difficult to form a good supply and demand relationship. Once encountering market fluctuations, it will cause difficult-to-solve procurement problems.
For example, Company A is an e-commerce company specializing in selling copiers online. At its peak, the number of its suppliers can reach more than 50. However, with the continuous development of the e-commerce industry, Company B has gradually become a strong competitor of Company A, and the price of Company B’s products is close to the cost of Company A’s products.
In the price competition, Company A’s sales volume plummeted. Through extensive research, Company A discovered the advantage of Company B: optimizing supplier partnerships and reducing the backlog of funds in the supply chain. In contrast, Company A has a large number of suppliers and has also invested a lot of money and time in supplier management.
From the above case, we can see that if e-commerce companies do not pay attention to supplier management and only regard supplier management as supply management, once other e-commerce companies can establish a procurement cost advantage. At this time, the e-commerce company will fall into trouble and will be quickly replaced by other e-commerce companies that adopt perfect supplier management measures, and other e-commerce companies will be left behind.
Having stable and high-quality suppliers can reduce the operating risks of e-commerce companies. E-commerce companies cannot only regard supplier management as supply management. In the process of managing suppliers, e-commerce companies must avoid the following misunderstandings.
(1) Unrestrainedly lowering unit prices
If e-commerce companies only regard suppliers as supply sources, then each supplier is just “one of” many suppliers, and the procurement principle of e-commerce companies has become a simple price comparison. Based on the concept of “the lowest price wins”, suppliers may pass off inferior products as good ones, or even stop supplying because of unprofitability. The supply of e-commerce companies is thus interrupted, and they have to pay a high price.
(2) Only auditing and supervising
Some e-commerce companies always have many complaints about suppliers. When faced with problems such as low supplier capabilities and poor supply quality, they only conduct stricter audits and supervision. In order to achieve the purpose of quality control, e-commerce companies may even impose severe penalties on suppliers. If e-commerce companies only audit and supervise suppliers, it will increase the distrust between the two parties. Once a problem occurs, both parties will focus on shirking responsibility instead of working together to solve the problem.
(3) Insisting on delaying payment
In order to avoid excessive working capital occupation by procurement business, many e-commerce companies will regard delaying payment as an important part of procurement capacity and even include it in the performance evaluation of the procurement department. As a result, delaying payment has become the norm. Some e-commerce companies will also delay payment or pay at a discount on the grounds of substandard goods or delayed delivery. This practice will seriously damage the credit and image of e-commerce companies.
(4) Frequently changing suppliers
When suppliers are regarded as sources of goods, e-commerce companies do not care who provides the products, but only care about the price of a single purchase, so they may frequently change suppliers. This makes it impossible for e-commerce companies to establish a solid relationship with suppliers. Once the market fluctuates, the supply chain of e-commerce companies will be broken.
Tips
In the short term, treating supplier management as source management may enable e-commerce companies to gain more profits. However, in the long run, such a model is not conducive to the improvement of the overall strength and sustainable development of e-commerce companies, and it is also difficult to establish a competitive advantage.