In a series of blogs beginning today, Alun Morris looks at how e-sourcing can be used for more than identifying and evaluating new suppliers to get best price. In this blog he looks at how it can help organisations keep a tight rein on complex, global supply chains.
The global marketplace has changed and today, thanks to the internet and global transportation links, there are few barriers to suppliers selling their goods and services worldwide. Many businesses are reliant on these global and multi-tiered supply chains. Yet their complexities bring about fresh challenges for supply chain managers as the increased risk posed by an expanding list of distant suppliers intensifies. And it’s not just your direct suppliers that pose a threat, what about the supplier’s own network? Rapidly shifting commodity pricing and supply, geo-political factors and ‘black swans’ create a landscape where one false move has the potential to rock the entire supply chain and business.
In order to minimise these risks, organisations must have full visibility of their supply chain. E-sourcing can help with this as it allows buyers and suppliers to engage with each other in aspects of the procurement process in a structured format, providing a much clearer view of what is happening. The ability to see what’s going on and study patterns or incidents in real time allows businesses to plan for, or proactively address, a problem before it becomes a major issue. It also allows benefits to be rapidly accrued if economic factors move one way or another (for example, currency, oil and shipping rates).
Vetting new and existing suppliers and ensuring they meet strict assessment guidelines is a necessary but time-consuming process. Automating this process using e-sourcing can speed it up and improve supply chain visibility by effectively managing relationships all within a central online portal.
E-sourcing enables businesses to evaluate suppliers according to strict assessment from the outset, helping to ensure best practice from the selection stage. Assessment criteria can include supplier ethics, delivery track record, quality of products or services, and sustainability.
For the supply chain manager, it provides a detailed view of prospective and current suppliers and gives an organisation the compliance and control that is often needed when managing a large number of suppliers and a large amount of data that can often be fast moving and complex.
The key benefit of e-sourcing is its ability to standardise processes and capture data on suppliers. This data can then be analysed to flag issues rather than being reactive and is one of the keys to helping manage today’s complex and global supply chains.
In the next blog in this series we look at how e-sourcing can aid supplier communication.
☛ Alun Morris is senior esourcing consultant at Wax Digital.