Who’s Accountable for the Interconnected Supply Chain?
As the world’s supply chains become increasingly interconnected, the responsibility for ensuring a smooth, end-to-end process starts to fall on the shoulders of a lot more suppliers, distributors, and business partners. Faced with this reality, companies must not only ensure that their own processes and procedures are running smoothly, but that their suppliers are also doing their jobs.
Achieving this goal across thousands (or even just a few dozen) stakeholders—many of which are Tier 2 or Tier 3 suppliers that play lesser roles in the manufacturing/distribution process—is a monumental task made easier with technology.
Here are three ways that you can use a cloud-based, connected portal to overcome this challenge:
- Use technology to get smaller suppliers on the radar screen. Most of the time, 20 percent of your suppliers generate 80 percent of your business. That leaves a full 80 percent of vendors that don’t drive much volume, but that need a way to communicate with you to keep you informed about their own manufacturing schedules, delays, and related issues. Using technology, you can loop in these smaller stakeholders and improve efficiency with increased visibility and collaboration.
- Create a process for non-compliance in the cloud. In the event that your suppliers fail to follow through on their commitments, use a non-compliance program to hold them accountable, administer fines, or take other actions. This can all be handled through a very automated process in the cloud, where everyone shares in the pain of non-compliance (not just your own company). The suppliers that hurts you company’s efficiency levels by not delivering the goods on time, for example, should be held accountable and forced to share in the pain that your own firm is feeling (i.e., unhappy customers, high shipping costs due to the need to expedite orders, and so forth).
- Hook your suppliers into a cloud portal. Let’s say you need 200,000 widgets over a 24-month period, and without these widgets you can’t make your own goods. If you don’t get your widgets on time, you can’t produce and deliver your product on time, resulting in unhappy customers and lost revenue. Avoid this trap by setting your suppliers up on a cloud portal. This will allow for collaboration between buyers and suppliers and provide visibility over upcoming orders and potential delays. For the sake of the above example, your supplier would commit to delivering 10,000 widgets every month on an agreed-upon date. If the date passes without a delivery, your supplier should be held accountable.
These strategies can also be applied with carriers that don’t meet on-time delivery expectations. Using technology, you can peel back the onion and figure out why those expectations weren’t met (e.g., the truck arrived but the freight wasn’t ready to ship yet), pinpoint the real problems, and get to the root cause analysis (RCA) quickly and efficiently.