First and foremost, to be able to handle the rapidly changing demand patterns and agile business operating models, today’s supply chains are undergoing a makeover. From being sedated, uni-dimensional sequences of discrete functions, the supply chain has transformed into dynamic, adventurous, and interconnected network. Furthermore, to achieve business objectives and deliver customer satisfaction, manufacturing, planning, procurement, inventory management, and logistics are harnessing end-to-end supply chain.
Firstly, new-age technologies enable the end-to-end supply chain. 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 company’s success, and therefore, their ability to meet customer demand delivers overall business performance and profit.
In this case, there is a need to manage suppliers to ensure reliable delivery from their end and risk mitigation. It is the procurement’s role to transform traditional procure-to-pay and cost-savings to a more strategic approach. The responsibility includes qualifying, on-boarding, and managing suppliers.
Learn More: Supplier Management Software
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 company’s financial results and damages its reputation. For this, a comprehensive supplier management strategy is crucial. Procurement authorities with large supplier bases, complex supply chain operations, and a large amount of direct spend, should adopt supplier risk management strategy. Through this, Procurement can create a disciplined framework for suppliers to deliver to the company’s business expectations.
As of 2018, Supplier Management practice in many companies-
The supplier value chain can’t be nurtured if inadequate and inaccurate information of supplier capabilities, their qualifications, and past performance expose companies to financial consequences including-
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-
The tectonic movements in the global supply chain landscape, require Procurement to lead it by example, such as-
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 below-
Finally, the invincibility of cloud technology to scale up supplier management dubs procurement as a strategic business partner. In addition to this, Procurement has to introduce automation and streamline processes involved in the source-to-settle cycle. Also, a full-proof supply chain implies synchronization of functions including manufacturing, production, logistics, inventory management, and procurement. Besides that, procurement should also educate suppliers about responsibilities and orient them to fulfill a company’s financial objective and customer delight. It is indeed time for a change in the supplier value chain.
Learn More: Vendor Management Guide