Your business relies on suppliers and subcontractors to deliver to your customers.
You know you want to manage them better, but how do you go about it?
In this article, we consider the different types of technology businesses are using to drive supply chain excellence and what may be the best for your organisation.
Firstly, let’s consider the most important areas of supply chain management:
- Identifying and understanding suppliers’ capabilities.
- Engaging with suppliers and buying
- Driving best value, relationships & performance management
Identifying and understanding suppliers’ capabilities
Utilising data to make informed decisions is key to your ongoing success. Understanding what makes a good supplier or the right supplier for your business is the starting point.
But this can depend on a whole raft of criteria which also changes as per the particular requirement.
- What does each department need to achieve their objectives? Quality, procurement, commercial and operations teams may all have different requirements. It’s essential to map this up front.
- Is it a product or service being supplied?
- What is the reason for supply?
- Who is your end customer and what are their requirements?
All these different perspectives need to be considered and a way of requesting different data sets for different scenarios is important.
Thinking about how you want to report will help you focus on requesting the right data in the first place. Below are some suggestions of additional areas to think about when capturing and updating supplier chain data.
- Environmental, Social and Governance (ESG)/ Sustainability data
- Social value data – Apprenticeships, size of business/SME or not
- Key performance indicators related to their supply
- Have suppliers’ capabilities changed?
A quick, simple way to collect this type of data is important to good supply chain management. Not only that, maintaining the information, ensuring certificates and accreditations are current is essential to minimising risk, passing audits and staying compliant.
Engaging with suppliers and buying
Selecting the best suppliers to engage with, as I mentioned above, is about requesting the right information in the first place. Once you have it, you need a quick and simple way to review it based on your set criteria.
Then you need a streamlined and repeatable process to run a buying event with your chosen suppliers. Nothing over complex for low-value high volume transactions, but something more robust and customisable for larger, more intricate requirements.
Finally, an easy way to compare responses, score and award contracts. Ideally with a simple way to see why the winning bid has been chosen for audit processes.
Driving best value, relationships & performance management
This is typically the area where many businesses fall down. Concentrating on driving down price whilst not focusing on long term value. What is the point in buying the cheapest if the quality keeps letting you down?
A simple way to gain a holistic view of supplier performance is vital to driving the best value and ongoing success. Good supplier relationship management should result in a real partnership and a win-win scenario.
In many cases, all that is needed is good open communication, with the opportunity for both parties to feedback to one another.
So, let’s investigate the most common types of technology used in supply chain management.
- Old School Tech – Excel, Word and emails
- ERPs – The engine that runs the business
- Supply Chain Management software
Old School Tech – Excel, Word and emails
Probably the most widely used method to manage suppliers is a raft of different spreadsheets, word documents and emails. The first generation of tech advances from pen and paper.
- Quick & simple way to collect data.
- Cheap – Most businesses already have this in place, so essentially free.
- Whilst, not the most efficient, it can work with small numbers of suppliers, low transactions and very simple requirements.
- Flexible tools used for all tasks.
Cons of Word, Excel & Emails
- Keeping on top of lots of different Word and Excel templates can be a challenge, with different individuals saving old versions and not using the most up to date forms could mean vital data is not captured.
- Getting people to complete excel sheets regularly and on time can be a challenge…What if they forget?
- Remembering when data needs updating is a challenge
- Often, when using local PC and laptop solutions or there is a lack of high cloud adoption or competence, only one person can access documents at a time. What if multiple people need to access/review the latest data simultaneously?
- Manual spreadsheet completion often results in slow inefficient processes
- What happens if the person emailed is out of the business – The information is siloed.
- There are no workflows and time-saving process-style functionality with Excel and emails, this can be in place with many supply chain software solutions
- Loss of information and version control.
- Can be a challenge in audit in getting the single version of the truth
ERPs – The engine that runs the business
First, let’s cover what an ERP is.
“Enterprise resource planning is the integrated management of main business processes, often in real-time and mediated by software and technology”
So, depending on your business sector, requirements and system capability, the ERP will usually be made up of several core activities, typically focused on Accounting, Finance and operations.
- One system that covers lots of functions in one place
- Usually sector-specific
- Process efficiencies from one integrated solution
Cons of using ERPs for Supply Chain Management
- ERPs are often driven by finance requirements and therefore may not cover all aspects of Supply Chain Management.
- ERPs are complex solutions with lots of modules and functionality, which means they can be very difficult to navigate.
- Because they are complex and difficult to navigate user adoption is usually very low outside of finance/accounts.
- Much of the required functionality for Supply Chain improvement is in Relationship Management and this is often missing in ERP’s.
- Many ERP’s do not have tendering or subcontractor enquiry capabilities.
- Typically ERP’s are internal facing and do not have supplier facilities to log in remotely.
- Supplier data largely falls on you/the buying organization to obtain, validate and maintain.
- Many legacy systems are on-premise with limited access when not in the office or slow connections via a VPN
- In certain Industries where subcontractor packages are used, ERP’s often do not have the functionality to enable this.
Supply Chain Management Software
Specific software designed for supply chain management. Most software should cover the core areas we mentioned earlier in the article but additionally they should be simple to use and cloud-based for easy access wherever the user is.
- Dedicated to driving improvements within the supply chain
- One platform for suppliers & buying organisations to access and see data pertinent to them based on their role and responsibilities
- Built-in alerts and reminders for certification & accreditation renewals/updates
- Simple ways to capture and search data sets required for different scenarios
- Workflow tools for process efficiencies
- Full audit trails available for decision-making review
- Structured supplier reviews, reminders and KPI tracking
- Allows the clear holistic view of supplier performance
- Ensures supplier data doesn’t go stale
If your business heavily relies on your supply chain to deliver excellence to your customers, you should really consider whether you are utilising the best technology for the supply chain management.
Older tech, or tech adapted to a use that isn’t its core function is no longer fit for purpose for forward-thinking organisations that are looking to grow. Scaling profitably relies on efficiency and effectiveness in your processes so you need a technology stack that supports and doesn’t stifle your ambition.