Supply chain challenges in 2015

Supply Chain ChallengeAs we look forward to welcoming in the New Year, Supply Chain Station is taking a look into its crystal ball to see what we think the biggest challenges will be in the coming year, and how we should go about solving them.

Creating greater enlightenment and transparency to the procurement process

With many public corporations issuing profit warnings and not hitting profit targets in 2014, a substantial amount of money has been written off their stock values. Whilst this is mostly down to under-performing sales, the late correlation and presentation of supply chain costs also undoubtedly has a part to play too.

The savings gained through efficient procurement can be significant and can therefore have a telling effect on the bottom line. To maximize the savings that good procurement can bring to the party, the complexity of supplier contracts; how they combine, interact and knock-on with each other needs to be summarized and delivered at the earliest opportunity.  The best and most timely way of doing this is to invoke the services of the many e-Sourcing platforms that are available. But these platforms can go further still in terms of giving procurement and accounting professionals the necessary tools to automate, and integrate these figures This not only brings them into play but also affords greater transparency as to where these figures have been derived from, and the trustworthiness of their real impact on overall costings.

The alignment of the procurement function within a given organization

An important part of the transparency process is the integration of the procurement function with other disciplines such as design, engineering, finance, IT, sales, and marketing. This will ensure that procurement produces the right results that are measureable, and that translate into meaningful information at both boardroom and stake-holder level.

Modifying inventory strategies

In 2014 we have seen the coming-of-age of multichannel retailing, which together with the simplification of supply chain management technology, has made the reduction of product life cycles more achievable. To take best advantage of this however, inventory strategies need to be realigned. The forecasting process and order trigger points need to be successfully integrated with multi-source options to select the correct choices in terms of determining the right procurement solutions; off-setting lead times against potential stock out scenarios. Short life cycles when controlled in a streamlined manner not only negate stock-outs but reduce exposure to obsolescence.

The progression of real-time performance management tools

More supply chains will look to adopt web based supply chain programs. These programs provide procurement professionals with the opportunity to gain improved visibility of their overall supplier base. This will provide insights into achieving time and money saving solutions.

The adoption of new breed web-based software

The new breed of web-based software, monitors supplier performance and helps to highlight potential risk areas. While the data for this sort of analysis has been readily available throughout 2014, and before, it’s the interpretation of this data into potential supply chain implications that has been lacking. These new web-based tools provide that missing link, and will be taken up more regularly in the coming year.

The emergence of the Asia-Pacific and Latin America markets

Both the Asia-Pacific and the Latin America markets have been highlighted as being potential growth areas for both manufacturing and logistics in 2015. Development of appropriate strategies to integrate these markets into new potential supply chain growth will provide much-needed alternatives to the former dominance of market places like China.

Forging buyer/supplier partnerships

RFP (Request for Proposal) strategies have been around for some time, but 2015 could well be the year that more procurement professionals actively seek out potential trusted partnerships with suppliers. Suppliers could be invited into the decision making process by asking them how they would solve specific problems. This will develop the relationship between buyer and supplier, highlighting a supplier’s creativity and problem solving mentality, both of which are fundamentals to building strategic partnerships.

The earlier partner-potential suppliers can be brought into planning and design meetings to share their thoughts and come up with best scenario solutions, the better. It gives suppliers the opportunity to provide intuitive input that would not only give their own businesses a foot on the ladder of the procurement process, and help to gain a stake in future business, but that would also help buyers and their organizations too, in terms of coming up with winning solutions, on a mutual trust basis.

Have your say at the comments section below


One Comment

  1. Agree wholeheartedly with your oabvrestions. More suppliers? Why not? As long as the cost to manage them ( in terms of Supplier Management and product / service TCO) decreases while the number increases.For more than a decade I’ve been a proponent of Procurement Departments approaching a Market, not a set of suppliers. In making a market, a innovative buyer/sourcer will build the lowest cost/highest value transaction base with his supplier. Ultimately, a favorable marketplace will ensure optimal, long term relationships or the flexibility to build them. Reducing the numbers of suppliers is set of supplier thinking, not necessarily where efforts are at all productively placed.Squeezing Suppliers is unfortunately a standard practice in many companies. This merely produces a short term effect and forces one’s trading partner to optimize its marketplace by finding another buyer, I say its time for Supply Management to update their Market Practices, not their purchasing practices.

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