Seven Top Tips to Enhance Your Position with Buyers

To succeed in today's global economy, suppliers must continually strive to make themselves more competitive with prospective buyers. How can they accomplish this? To find out, we asked an expert—Sarmento Silva, purchasing lead of global P2P optimization for AstraZeneca. With international sales of over $21.4 billion, AstraZeneca is one of the world's leading pharmaceutical and health care services companies. Drawing on his extensive experience in supplier/buyer relationships and purchase-to-pay optimization strategies, Silva suggested seven ideas suppliers could use to position themselves better with buyers—and gain more business.

Tip #1: Communicate with the Right People
"Communication is at the top of the list," Silva says. "It's critical for suppliers to understand that the communication loop includes not just buyers, but also back-office employees. For example, one of the greatest snags we hit is not knowing which accounts receivable people we should work with to correctly position our back-office workflow." As a result, errors and processing problems creep in, which not only drive up costs, but also delay the payment process. "Just having a salesman's phone number is not enough to have a strong business relationship," Silva points out. "Suppliers should ask their contacts for all the information needed to streamline back-office processes."

Tip #2: Use Technology to Expedite Manually Handled Tasks
Silva also points to the importance of using technology to handle formerly paper-based processes. "There's a great value for buyers in being able to interact with their suppliers electronically, because it's quick and accurate," he says. Invoices are a key example. "Paper invoices require postage, they get lost, and it takes time for them to go through the mail. Buyers sometimes hesitate to negotiate discounts with paper invoicing, because the back office processes are so cumbersome." Even saving a few steps can make a big difference. "When a paper invoice comes in to AstraZeneca, the first thing that happens is it gets scanned," Silva says. "So someone has to open the envelope, take out the paper, run it through the scanner, make sure the image fits the required format, and then destroy the paper copy. It may not sound like much, but when you're talking about 17,000 or 18,000 invoices a month, having even one or two major suppliers send them electronically generates major cost savings."

Tip #3: Create a Friendly User Experience
Employing technology to create a friendlier end-user experience is valuable as well. "The sophistication of end users has increased dramatically because of their personal use of the internet," Silva says. "So if I'm using Amazon.com to buy things at home, and then at work I see these crummy-looking supplier websites and catalogs, it's going to sour me on using them. Buyers are more sophisticated today than even two or three years ago, and they'll be getting exponentially more sophisticated in the future. That means they want eCommerce capabilities that are quick, fast, and easy." Moreover, the up-front costs of investing in eCommerce tools are often minimal compared to the increase in business that results.

Tip #4: Understand Global Business Requirements
Gaining familiarity with the limitations and needs of worldwide buying organizations is another crucial strategy. "If you're trading with global companies that conduct multinational deals, you have to understand that the way you send invoices in the United States compared to Italy might be significantly different," Silva says. "When you're dealing with European companies, for example, you need to a way to handle value-added tax (VAT)." Suppliers able to quickly and easily handle international business requirements are more likely to win sales than those who cannot.

Tip #5: Consider What Happens After the Sale
"Many problems arise simply because suppliers aren't conditioned to think about what happens after the deal is made," Silva says. "They're driving to make the sale, and once that's done they forget all the hidden costs involved in finishing up and getting the invoice-to-payment process correct." To solve this problem, Silva suggests that suppliers understand and convey the information needed for their database. "This is something Ariba® Supplier Network™ (Ariba SN) can help with, because it makes that type of information consistently organized and mandatory. From a buyer's perspective that's a great value-add, because we don't have to worry that anything will slow or stop the process once invoices start coming in." It also helps ensure that suppliers get paid on time. "Often suppliers call up irate because they think the buyer just chose not to pay them for some reason," Silva says. "But the delay is usually because the documents weren't right-the purchase order numbers or some other information was missing-and correcting that adds time."

Tip #6: Maximize Your Visibility
Increasing visibility by joining online supplier networks can help drive greater business to suppliers as well. "Once a supplier is established as a good working partner, the opportunities and visibility for those suppliers, especially if they're on Ariba SN, are much greater," Silva says. "EDI is also helpful in this way, but the drawback is that it may be very expensive. Supplier hubs like Ariba SN can provide the same functionality at a much lower cost."

Tip #7: Develop a Business Case for Prospective Buyers
Silva also suggests that suppliers model their process efficiency into a business case to put before buyers. "If a supplier clearly demonstrates that he or she can reduce the buyer's back office costs, obviously that supplier is going to gain significant advantage over competitors," Silva points out. "The overall cost of doing business with a company goes far beyond price to include process costs." Suppliers can proactively show how their use of electronic invoicing or other technology more than offsets a slightly higher product cost, for example. "Many buyers might not think about that, but making a case for it could give suppliers a real competitive advantage."