Every day, I see examples of businesses that fail to see the difference between earning money from suppliers and earning it with them.
Price is important, but so too is solid supply reliability. Incomplete deliveries or deliveries that arrive late or not at all, can have a significant and negative impact on overall business performance.
A lot can be gained from streamlining delivery schedules, and meat-processing systems manufacturer Marel is a great example. By giving suppliers information about future demand as early as possible, it has improved the efficiency of its plant by as much as 40 per cent. And by including purchase order requisitions, it gained a better insight into the peak loads at suppliers.
Based on these insights, it can either bring orders forward or postpone them. It can identify which goods are delivered with greater consistency and ensure schedules remain stable. Marel’s suppliers can now almost always meet the required demand, which means it can manufacture more efficiently and at a lower cost.
Procurement departments deal with hundreds of outstanding purchase orders every day. It is neither cost- nor time-effective to chase all of these. They need to be able to quickly assess which purchase orders really impact on production or delivery to the client.
Production companies must be aware that collaborating with suppliers and generating insight from procurement can have a major impact on supply chain performance. It plays an important role in improving the collaboration between client and supplier. The result is that suppliers have the opportunity to contribute their knowledge and buyers can make good use of it. It’s a model some of the best and most effective operations follow. Do you?
☛ Jacques Adriaansen is the co-founder of Dutch software firm Every Angle.