Helping your insurance company thrive in the current economy is a bit like playing Whack-A-Mole. Solving one business problem seems relatively easy – until another related one pops up in its place.
That’s how I think about supplier management. To cope with pandemic restrictions, inflationary costs, and simple availability issues, insurance companies have been broadening their supplier pool. If your current suppliers can’t deliver, you find another one that can. Seems straightforward, right?
But adding new suppliers increases the complexity of managing your vendor base. A larger, more diverse pool of vendors makes it more difficult to gain visibility into the performance of any one provider – or all of them.
For many companies, adding more suppliers makes planning more inconsistent. It can also complicate their ability to mitigate supplier risk and compliance.
Supplier Performance Is Undermanaged
When I talk to insurance industry executives, the outcome is clear: too many companies still struggle to adequately manage vendor performance.
In a recent Oxford Economics study, nearly half of respondents say that gaining visibility into vendor performance is challenging. Even though 67% say they use procurement technology for supplier management, 41% continue to experience supplier performance issues.
And that might be an understatement. In the same survey, 39% of insurance executives say that most procurement processes are still manual. That tells me that many insurers may not be fully aware of their vendor performance issues.
Digital Solutions Elevate the Role of Supplier Management
What should insurance companies do to overcome these challenges? It’s time to move beyond manual procurement and embrace innovative new technologies.
A comprehensive vendor management program, supported by digital technology, can help you determine how good your vendors really are. By identifying shortfalls and collaborating to improve outcomes, you can get more service and value from each supplier.
Digital procurement solutions can help you monitor and analyze vendors’ reliability, quality, and performance. By embracing these technologies, you can gain real-time insight into supplier performance. In an economy where everything changes by the minute, this insight can help you improve control and increase your competitive advantage.
Manage Vendor Performance with Digital Business Networks
One of the most popular ways to modernize vendor management is to use a digital business network. By connecting insurance companies with a multitude of vendors, large networks simplify the adoption of modern vendor management strategies.
Digital business networks let you access a diverse collection of new suppliers with the click of a mouse. You can streamline order requests and fulfillment while simplifying collaboration between insurers and vendors.
Procurement decision-makers gain new insights into delivery times, product and service quality, costs, and service-level agreement compliance. The data helps identify performance gaps and identify cost savings opportunities.
You can manage more vendor relationships at the same time throughout their engagement. And when problems arise, you can quickly pivot to another vendor that can meet your needs.
Improve Business Outcomes by Digitalizing Procurement
Digital business networks and other technologies deliver quantifiable value. In the Oxford Economics study, 60% of respondents that have embraced digital transformation say they improved supplier collaboration. Nearly as many, 57%, report enhanced supplier performance management.
In a difficult economy such as this one, those benefits can make the difference between lackluster performance and real competitive success. By working with reliable suppliers that deliver what you need when you need it, you can give customers a more engaging, satisfying experience.
And because happier customers generally lead to a better bottom line, digital business networks sound like the best solution to pop up in a long time.
Explore the SAP for Insurance portfolio.
Toni Tomic is global head of Insurance at SAP.