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First and foremost, to handle rapidly changing demand patterns and agile business operating models, todayโs supply chains are undergoing a makeover. The role of procurement in value chain has become pivotal, as supply chains shift from being sedated, uni-dimensional sequences of discrete functions to dynamic, interconnected networks.
Furthermore, to achieve business objectives and deliver customer satisfaction, manufacturing, planning, procurement, inventory management solution, and logistics are harnessing end-to-end procurement in supply chain management solutions.
End-to-End Supply Chain
Firstly, new-age technologies enable the procurement process and supply chain solutions. For example, cloud computing, with built-in flexibility, connectivity, embedded analytics, and mobile accessibility, serves great for companies for competitive advantage. In addition to this, newer considerations are underway wherein suppliers are expected to deliver a lot more. Suppliers play an essential part in a companyโs success, and therefore, their ability to meet customer demand delivers overall business performance and profit.
Role of Procurement in Value Chain
In this case, there is a need to manage suppliers to ensure reliable delivery from their end and risk mitigation. It is the procurementโs role to transform traditional procure-to-pay and cost-savings to a more strategic approach. The responsibility includes qualifying, on-boarding, and managing suppliers.
Supplier Management Strategy & Procurement
It should be noted that supplier risk is known as the second-highest priority for CPOs after managing cost and profit. If not managed competently, supplier performance impacts a companyโs financial results and damages its reputation. For this, a comprehensive supplier management strategy is crucial. Procurement authorities with large supplier bases, what is procurement and supply chain management solutions, and a large amount of direct spend, should adopt a supplier risk management strategy. Through this, procurement can create a disciplined framework for suppliers to deliver to the companyโs business expectations.
Present Scenario: Supplier Management Practices
As of 2024, Supplier Management practice in many companies-
- is inconsistent
- lacks accuracy
- exists in silos &
- poorly leverages functions (sourcing, contracting, & supplier onboarding)
Consequences: Poor Supplier Management Practices
The supplier value chainย canโt be nurtured if inadequate and inaccurate information of supplier capabilities, their qualifications, and past performance expose companies to financial consequences including-
- process disruption
- missed deliveries
- compliance issues &
- reputational losses
Metrics to Qualify Suppliers
In addition to all the above, companies venturing into markets and in new geographies need to qualify suppliers as their principal business partners that would ascertain-
- dependability for material sourcing
- as per schedule
- for tapping agile business opportunities
Also Read: Supplier Performance Evaluation โ A Quick Checklist
Transform the Game through Procurement
The tectonic movements in the global supply chain solution, require procurement solutions to lead it by example, such as-
- thoroughly evaluate their supplier base
- involve them in the bidding processes
- reward the best supplier/s in the procurement value chain
- solicit supplierโs participation during contract renewal for the best bargain
- increase the pace of supplier onboarding
Capabilities for Supplier Risk Management Transformation
At this time, it is important to revise the practice. Not only induct modern S2P technology, but also nurture a supplier value chain mindset. Along with the above, for a full-fledged transformation of supplier risk management, abilities to be considered are as belowโwhat is procurement and supply chain management.
- Without a doubt, safeguard a business from risk by reducing supplier management costs by building supplier data inventory that includes supplier categories, regions they represent and historical performance
- Definitely ensure all suppliers have qualified on trust that a business expects for its growth. Safe and responsible sourcing are two critical aspects of reliance from extended supply chains
- unlike previously, execute contracts nearing expiration or revision in terms and conditions thatโll ascertain negligible hindrances to business continuity
Download our whitepaper: How prepared are you to combat your supply chain risks?
Procurement to Initiate Automation in the Supplier Value Chain
Finally, the invincibility of cloud technology to scale up supplier management positions procurement in supply chain management solutions as a strategic business partner. In addition, procurement solutions must introduce automation and streamline processes involved in the source-to-settle cycle. A robust supply chain solution requires synchronization of functions, including manufacturing, production, logistics, inventory management, and procurement solutions.
Furthermore, procurement in value chain should focus on educating suppliers about their responsibilities and orienting them to fulfill a companyโs financial objectives and enhance customer delight. It is indeed time for a transformation in the supplier value chain.
Experience the transformative power of our solutions firsthandโrequest a demo today and take the first step toward optimizing your procurement processes!
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- Whitepaper: How prepared are you to combat your supply chain risks?
