Unravelling the Complexities of Multiple Supplier Relationships

22nd October 2018

It’s not uncommon for merchants to have dozens of suppliers (including armored transport, banking partners, cash office technology and cash processors) within their cash management arrangements.

It’s almost impossible for merchants in the U.S., with estates spread across 3.8 million square miles to consolidate down to a single vendor for each service, so managing multiple relationships is an inevitability for the merchant community. This can involve logging into several portals or reports just to review current service levels and your total cash costs spread across many invoices – all needing reconciling.

The complexities that surround managing multiple supplier relationships is a recurring theme in the world of payments. It’s complex. It’s opaque. And it’s time consuming and resource-demanding for internal teams to handle. We highlight five key issues for merchants who are managing multiple partners to consider.

Create Competitive Tension in Your Supply Chain…

Spreading your estate’s volume across multiple suppliers can often create competitive tension in your supply chain and encourage market-leading rates from your suppliers and benchmarks for service levels. For U.S. merchants operating across a vast geographical footprint, this is often the only option as your estate is unlikely to correlate completely with a single supplier’s footprint. Regional providers may often bid competitively to attract business away from the large providers, but you need to understand regional player’s capabilities beforehand and ensure they can provide the service your business needs.

…But Also, Carefully Consider Consolidation

Less suppliers throughout your supply chain can often mean less resource and relationship management for you and your internal team. There are two ways that you can consolidate your cash arrangements – taking advantage of the range of product offerings your current suppliers have or having one contracted partners who will manage the outsourced relationships. Consolidation can result in benefits in terms of managing relationships and economies of scales, but there can also be additional costs – with some suppliers adding a margin for their outsourced contracts.

The solution that is right for your business will depend on your KPIs, whether you are driven by cost, internal resource capacity or performance and service levels.

Understand that Communication is Key

It’s important for all merchants to conduct regular meetings with banking, armored transport, cash processing, cash office technology partners and internal stakeholders. Know your account manager and ensure you keep the lines of communication open. 

Regularly communicate with team members on-site about new processes and procedures. Innovation and new technology plays a key role in the cash industry and maintaining a good line of communication with all your suppliers you’ll ensure you are up to date with product offerings and improved processes that could benefit your business.

Jenna Birch | Product Manager

Regularly Review Your Invoices and Contracts

Your invoices contain a vast amount of complex information and detail. It’s not as simple as receiving a single monthly bill. It is a time-consuming task but it’s important to fully understand each aspect of your invoices across your supply chain. Look how they vary monthly and between suppliers. Compare the rates charged by each supplier to your contract and ask yourself if those allowances are consistent? If there are excess charges do you need to discuss with store operations or the supplier? By understanding each of the service items you will have better visibility of where you can drive efficiency and benefit from cost reductions.

Find a System That Works for Your Team

Knowing the exact details that you and your team need to extract from invoices for forecasting and decision-making purposes is extremely complex. What invoices are these key figures and trends pulled from? Does the current invoice format work for you or is there an alternative reporting format that might work better? Ensure you remain aware of the innovations that your suppliers can offer to help compare and analyze reports over time.

In Summary…

To say that managing multiple complex supplier relationships throughout the cash supply chain is challenging is an understatement. The cost of cash is even more difficult to calculate than the cost of cards as merchants are often juggling intertwined relationships with armored transport providers, cash processors, cash office technology suppliers, and banking partners. Cash costs are spread across invoices from these key players and reconciling them is riddled with complexity (see our recent blog on Banking Invoices 101). Most merchants have multiple banking and armored transport partners, and it’s not uncommon to have over 20 different suppliers throughout your estate. Despite these challenges, it’s important for merchants to accurately understand their cost of cash. Without this understanding it’s impossible to identify areas to drive improvement.

For more information on conducting a holistic cash management review please contact us today using the button below.

You Might Also Be Interested In These...

Blogs
10.18.2018
CMSPI Attends Secure Cash and Transport Association in Chicago

CMSPI encourages events that facilitate discussion among all parties within the cash management industry.

Read More >
Blogs
10.17.2018
CMSPI Embark on Comprehensive Cost of Cash Study

Our expert cash team will be conducting a comprehensive study of the true cost of retail cash management in the U.S.

Read More >
News
10.17.2018
New Jersey Proposes Bill That Would Force Merchants to Accept Cash

New Jersey has proposed legislation that would require all brick-and-mortar retailers in the state to accept cash payments.

Read More >
Events
10.16.2018
CMSPI Is Attending The Anti-Counterfeit & Currency Expo in Vegas

We’ll be attending the first annual Anti-Counterfeit & Currency Expo in Las Vegas, November 4-7 and we’d love to meet up!

Read More >
Want to discuss your cash arrangements?