Supply chain 20 August 2015

How software can help you keep a tight rein on your supply chain – even if it’s overseas

Often working with overseas suppliers can be far more cost-effective – though it brings about other difficulties
Often working with overseas suppliers can be far more cost-effective – though it brings about other difficulties

Alun Morris, eSourcing expert at Wax Digital, looks at how eSourcing software can be used for more than identifying and evaluating new suppliers to get the best price, such as helping improve visibility of your supply chain as it grows.

As your business grows, inevitably your supply chain will grow too. At first, you may just rely on a handful of suppliers you know well, but once your business starts to take off and you need to cast your net wider, suddenly you have a supply chain that needs identifying, managing and looking after.

Your supply chain will become essential to the success of your company and will impact on most areas of it. For example, forecasting customer demand, sourcing of materials, manufacturing and distribution. Managing a supply chain and safeguarding your business from risk can be a complex challenge, especially when you’re faced with changing demands from your customers and the market you operate in.

The global marketplace has changed and today, thanks to the internet and global transportation links, there are now few barriers to suppliers selling their goods and services worldwide. And with intense pressure on businesses to minimise costs, often working with overseas suppliers can be far more cost-effective.

As a result, many businesses today are reliant on global and multi-tiered supply chains. Yet their complexities bring about fresh challenges for businesses as the increased risk posed by an expanding list of distant suppliers intensifies. And it’s not just your direct suppliers that pose a threat, what about the supplier’s own network, and even their suppliers? Rapidly shifting commodity pricing and supply, geo-political factors and “black swans” create a landscape where one minor event has the potential to rock the entire supply chain and business.

If it’s possible that your supply chain could operate at this level of complexity in the future, you must have full visibility of suppliers at all in times in order to minimise these risks. This is where esourcing software can help, as it allows buyers and suppliers to engage with each other in aspects of the procurement process in a structured format – thereby providing a much clearer view of what is happening.

Vetting new and existing suppliers can be a time-consuming, admin-filled process
Vetting new and existing suppliers can be a time-consuming, admin-filled process

The ability to see what’s going on and study patterns or incidents in real time allows businesses to plan for or proactively address a problem before it becomes a major issue. It also allows benefits to be rapidly accrued if economic factors move one way or another – for example, currency, oil, shipping rates and so on.

Vetting new and existing suppliers and ensuring they meet strict assessment guidelines can be a necessary but time consuming process. Automating this process using esourcing can speed it up and improve supply chain visibility by effectively managing relationships all within a central online portal.

Further more esourcing also enables businesses to evaluate their suppliers according to strict assessment from the outset, helping to ensure best practice from the selection stage. Assessment criteria can include supplier ethics, delivery track record, quality of products or services and sustainability.

For the supply chain manager, it provides a detailed view of prospective and current suppliers and gives an organisation the compliance and control that is often needed when managing a large number of suppliers and a large amount of data that can often be fast moving and complex.

The key benefit of esourcing is its ability to standardise process and capture data on suppliers. This data can then be analysed to flag issues rather than being reactive. Don’t lose sight or control of your supply chain before it is too late; clearer visibility is the key to helping keep a more informed and effective rein on your suppliers.

Image: Shutterstock

Alun Morris is the esourcing expert at Wax Digital.

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