Be Your Own Leader in the Modern Supply Chain
Businesses are spearheaded in all directions. In the supply chain business, you have multiple tiers structures, where the first-tier suppliers are closer to the customers, and lower-tier suppliers are closer to manufacturers. Pressures exerted from every touchpoint bring challenges to stay competitive in this realm of business. It could be hectic and disorderly sometimes. As customers demand faster, more efficient services, supply chain businesses need to be innovative while juggling speed, cost, and quality. On the other end of the spectrum, manufacturers need to operate their business very efficiently and transparently. Today, the manufacturers need to renew their mindset of not just a manufacturer of products but also the manufacturer of innovation. They need to take a leadership role in the supply chain business. For example, jet engine producers are not just producing engines, but they are changing their business model to sell engine uptime. Once they gather data on their engines before, during, and after a flight, they can optimize their engine uptime while preventing known issues. The manufacturers need to take active roles in creating the means and opportunities for collaboration with other suppliers. In this article, we discuss the problems in the modern supply chain and explore possible ways of solving these challenges and lead your business to the next level.
1. Making Sustainability Standards a Priority in Supply Chain
For years, consumers become more aware of where and how they get products to come from. People become worried about whether or not these products cause environmental issues during manufacturing. The moral standard needs to uphold, so no workers are being harmed in any way. They should allow wearing protective gear and being compensated fairly with human rights policy in the workplace. There is no shortcut to making things right. The supply chains should think that this is an opportunity to preserve resources and make things more efficient. Unless your business exists only for the short term, these sustainability standards help the company to strive in the long term as you grow to integrate your business closely with like-mind organizations. The world becomes a more moral, ethical, philanthropic driven society. This effort coincides with the practice of collaboration, where everyone shares burdens to create a better, clean tomorrow.
2. Improving Supplier Relationship Management (SRM)
Many companies have used customer relationship management (CRM) software to better engage and interact with customers. Similarly, suppliers need a system to engage with their suppliers and partners. Traditionally, the companies only begin to manage the supplier relationships when there is an issue that occurs. A more forward-focused approach has gradually replaced this reactive approach. Before an agreement with a supplier is signed, we should manage the relationship right from the start. With a strategic approach, business processes become smooth while developing a well-deserved reputation. Thus, investing in a suitable SRM software solution is key to a successful supplier relationship management. A research report estimates a considerable growth for the Supplier Relationship Management (SRM) software market by 2025.
For your consideration about the software, you should make sure these features are included in the SRM software:
A simple but powerful platform that integrates supplier management solution functions, such as PO management, processing, and tracking, is on the same platform for keeping track of information about your suppliers in one place.
Automate Invoice Processing feature should take care of matching the orders, vendor invoice processing in either 2-way or 3-way match payments to reduce errors. With predictable automation, people can focus on higher-value activities.
Flexibility built-in the system allows you to adjust prices or costs since you may need the flexibility to keep your best suppliers that provide value directly to your customer. A deeper, stronger relationship with your suppliers keeps your business healthy.
Develop your custom SRM process that streamlines the entire process from documentation to managing vendor/suppliers' relationships.
SRM can help your company repeat the success once you set a clear, repeatable set of processes that ensure the best relationship strategy when it provides you useful insight.
The SRM software solution makes overall business more efficient. Tasks are streamlined and automated, and management can focus more time on improving the value of your suppliers.
3. Start to share your data to create a reliable supply chain collaboration
Collaboration is crucial to building a reputation, relationship, and authority. Sharing your data means extending your influence and presence in the industry. In the long-term, your business becomes more valuable. There are several benefits to supply chain collaboration. Both inventories and costs can be reduced and adjusted according to estimated demand. Deeper collaboration allows further benefits in protecting itself with the pact of suppliers to diminish the impact of the ever-changing market. The ability to absorb additional costs due to significant fluctuations from the external factors like the recession or pandemic. When companies are more collaborative with suppliers, they can minimize the negative impact and save their profit margin. There are always opportunities beneath every risky situation. In such circumstances, strategic partners can help to create innovative products that differentiate themselves from the rest during unfavorable times.
Here are some of the things you can do to start your supply chain collaboration:
Select partners and suppliers based on their value potential, capability, and collaborative potential.
Allocate extra resources to create collaboration infrastructure with the right people and organizations.
Begin collaborating with other organizations with your most strong capabilities.
Collaboration in supply chain business is not an easy task because the skills are different from the limited knowledge in sourcing or managing supply chains. It takes some devotions in transforming the management itself to realize the benefits of supply chain collaboration.
Rethink about your business: What business is your company in?
In the era of digital transformation, you must rethink what your business is really in. If you think that your company is just a part of the supply chain, remember any ring in the chain is replaceable. Digital transformation teaches us one important lesson: to survive this disruptive era of technologies, you must be unique and bring your exceptional value to the stage. In Unexpected Digital Transformation Journey From Two Oldest Giants, we mentioned that the reason that Kodak lost its empire was that it did not recognize that they were in the memory preserving business rather than in the selling camera business. In comparison, Hilti, a tool manufacturing company, has succeeded its digital transformation to become a service company. Regardless where your business lies in the supply chain, you need to rethink your business and take a leadership role in the supply chain by starting a collaborative initiative with your strongest capability. So what business is your company really in?