Those who work in the purchasing and supply chain area have probably heard about cryptocurrency, bitcoin and blockchain.
With the rise of digital currency (bitcoin being the best known) in global trade, many companies begin to apply this technology in their operations in order to modernize, streamline and optimize processes. This ultimately brings new concepts and services to be replicated as demand requires.
The blockchain concept is relatively new and, in a simplified way, can be defined as a series of immutable data records, managed by a decentralized computer system that does not belong to any entity, this block of information is protected and linked to each other, using encryption.
Since this is a service that still generates many doubts and uncertainties, we have created this article to unveil this concept and its application in the purchasing department and supply chain.
What is Blockchain after all?
Before conceptualizing this technology, we need to talk briefly about bitcoin.
Decentralized cryptography – or electronic money – has been in use since 2008, when it was presented in The Cryptography Mailing discussion group by a programmer or group of programmers under the pseudonym Satoshi Nakamoto.
Bitcoin is considered the world’s first digital-decentralized currency, creating an alternative economic system. The currency does not need third parties to function, i.e. it does not depend on banks, large corporations or governments for the money to be moved.
Financial transactions with bitcoin are recorded in a distributed database – an extremely secure, decentralized network without a central management entity structure called a blockchain.
To illustrate, we can compare the blockchain to a public ledger (or accounting book) that records virtual currency transactions in a reliable and unchanging manner. It records information such as: the amount of currency traded, who sent it, who received it, when this transaction was made, and where in the book it is registered.
The service stores transaction information in blocks, stamping each block with a time and date record, thus being a chain of blocks. And what makes it so special is that it is not subject to a specific authority, but is a system in which the information is open to everyone who is part of it – everyone involved is responsible for their actions.
The main advantage of the service is that, with it, transactions are transparent, blocked and protected through encryption, making any attempt at fraud extremely difficult – but it’s good to point out that this does not make the system completely secure.
And since any modernization that brings agility and greater security to the purchasing process is beneficial, blockchain technology is increasingly seen as a potential market disrupter in purchasing and the supply chain.
Applying Blockchain in the purchasing department
According to MarketsAndMarkets consultancy, the blockchain market is expected to grow a lot in the coming years – the sector’s turnover will rise from $1.2 billion to $23.3 billion globally and the annual growth rate is 80.2%. Gartner has positioned the blockchain with great growth viability in the next five to ten years.
As we can see, innovations based on this technology are promising, with several ways and reasons for it to be applied in purchasing processes and supply chain. Let’s look at some of them:
A) Intelligent Contracts
Blockchain in purchasing allows the creation of intelligent contracts that are tamper-proof and automate actions to meet predetermined conditions. For example, payment terms incorporated into the contract automatically generate incoming and outgoing payment invoice notifications based on the approved data stored in the blockchain, eliminating the need for the supplier to issue the invoice and for the purchaser to validate it.
B) Information Reliability
The blockchain, as the name suggests, is a chain of blocks that stores digital information. For a new information to be incorporated into your database, you need to go through 3 steps:
- A transaction: an individual transaction is incorporated into a block that joins others to form a secure network of chained blocks, all of which carry a unique content. The big difference is that the later block adds its own content to the previous block’s fingerprint, generating its own fingerprint – and so on;
- Transaction verification: a computer network verifies each transaction to make sure it occurred as informed by the person responsible for the transaction. Only then is the process confirmed, joining thousands of other similar processes;
- Transaction identification with a code: finally the transaction receives an identification code, called a hash, and the block is added to the blockchain. The hash works as a kind of seal, if the block is changed, the hash changes, which invalidates that block.
After all these steps, the information is recorded in the ledger, from where it cannot be deleted.
In addition, each blockchain network has “nodes” that bring together participants for the same purpose – for example, bitcoin “nodes” are used to transfer money. And every time a person can validate a block or identify an error in the network, they receive a reward. These blockchain sentinels are called miners.
With all these precautions, the risks associated to traditional databases no longer exist, which offers security in the information exchanged via the blockchain and also making data tracking easier.
C) More transparency
Blockchain technology in purchasing also increases transparency throughout the process, since the record of all transactions cannot be changed by anyone without identifying the change. And if a transaction is malicious, it can be identified and treated before it becomes a damage to the business. Inspecting the network’s actions and pointing out suspicious modifications is another of the miners’ competencies.
Examples of blockchain in use in the supply chain
The use of blockchain in the supply chain is already a reality and has been creating benefits for many companies.
In the food and beverage industry, for example, Walmart’s supermarket chain has joined with IBM to track pork from China. Unilever, Nestlé and Dole have also used IBM’s experience and adopted IBM’s Blockchain to improve the traceability of foods such as bananas, chocolate and chicken – the blockchain records the origin of each item, where it is stored and its expiration date.
It has also been helping to track all stages of the global coffee trade, from farmer to consumer, collaborating to ensure the origin of the product and to reach a fairer price to the final consumer. Ireland’s Moyee Coffee was one of the first companies to innovate and use the technology.
It is clear that blockchain in purchasing and the supply chain will enable advances ranging from fraud protection to speed in the purchasing process. And even if innovation does not happen overnight, it is worth thinking about how to incorporate this technology into your company so that it will come out ahead.
Also, take the opportunity to optimize the purchasing process with Soluparts‘ experience. Present in five countries and negotiating with the world’s largest suppliers, our experts will guarantee you the best business conditions.
The increasing use of technology that marks the so-called Industry 4.0, has been discussed by different economic sectors in order to meet the global changes that have occurred in recent decades.
This concern has been reinforced recently as a result of the Covid-19 pandemic, which has impacted (and will continue to impact, according to forecasts) our lives over the coming years.
There are several examples of technological advances and challenges that are happening in areas of the economy. In the supply chain, for example, one of the challenges is the automation of activities that are done by humans.
According to a DHL study on robotics in logistics, around 80% of operations center activities are still done manually, but this number will change dramatically in the near future.
Experiences are already being made in this regard and you will learn about some of them by reading this article. Come take a look!
Impact of robotics on the supply chain
A recent post from the RoboticsBiz portal, specialized in the subject, says that there are two relevant issues related to the modern supply chain: the first one refers to the growing need for technology to handle the quantity of deliveries (for example, data prove the increase in demand for online retail sales in countries like the United States, China, France, Germany, United Kingdom, among others). The second, on the other hand, points to the reduction in the availability of skilled labor focused on this type of service.
Forbes magazine also recently published an article on the subject, discussing the impacts of autonomous technology on the supply chain, by helping to transport goods without human participation (or with reduced interference) and more accurate inventory control.
Until recently, there were many technological difficulties for the implementation of robots in supply chains and logistics activities. However, this issue is developing rapidly and today we can see robots that have a high degree of accuracy in their functions, which helps to reduce costs and increase productivity.
Besides the use of robots in warehouses, a subject previously discussed in an article about the benefits of an intelligent supply chain, there are other solutions being developed that are in different stages of improvement and are also important for the modern supply chain. Check out some of them below.
1. Store Robots
There are already some cases of mobile robots and drones in stores, helping to control the stock and price of products on the shelves. Recently, Walmart announced it will use Bossa Nova Robotics company robots to carry out these activities, making the work of its units’ employees easier.
2. Autonomous trucks
Case studies of the use of stand-alone trucks, such as in iron mines in Australia, show that they can help increase the efficiency of companies and the safety of teams.
Several development tests of autonomous trucks have already been conducted in recent years. Uber, for example, has already conducted a successful experiment three years ago, but has decided to prioritize other fronts of its business – other important players in the stand-alone truck market are: Embark, Daimler/Mercedes, Volvo, Tesla and TuSimple.
However, there are a number of obstacles to this type of activity: there is a significant risk of accidents that can lead to people dying. The public perception of the safety of this type of vehicle is a crucial point that will influence the future of autonomous trucks.
Another challenge is to reduce investments in the development of autonomous trucks. Starsky Robots is a case in point: it has had successful experiences with this type of truck in recent years, but it is closing its activities because of the reduction of financial contributions.
One possibility for the future is the change of focus, from totally autonomous vehicles to simpler semi-autonomous models, which will allow the reduction of human action, with the participation of robots in certain stages of the supply chain.
3. Autonomous deliveries
The delivery system (among them the “last mile” from the distribution center to the customer) becomes more complex with the increasing demand for home delivery, which creates the need for investments in automation to reduce costs and support workers in order to increase productivity.
Several companies are already testing this technology in cities and university campuses. The idea is that robots take the order to people’s homes, and one must type a code to release the product that is in the trunk. Ford, for example, has been testing the technology to feel the reception of customers regarding this type of delivery.
It is important to note that robots can also help workers with more complex deliveries, with the use of exoskeletons that will help lift and handle larger and heavier loads. Drones can also be used for deliveries, in cases of people living in remote locations. And robots will be able to receive the order in the customers’ homes, in case they are not available.
4. Autonomous freight trains
Tests have also been conducted in the United States for this type of autonomous transport. Federal regulations in the country are tending towards a release of the product, however, the authorities reinforce the need for anti-collision technologies to avoid accidents. As a solution, cargo transportation companies have already begun to implement Artificial Intelligence and Machine Learning systems in their safety protocols.
Challenges for the future
There are a number of initiatives that are promoting increased automation in the supply chain. For the improvement of this activity, advanced technology centers are being created to stimulate innovation and development of solutions (such as Honeywell Robots in the United States).
For example, an important new feature predicted is that the robots of the future will be connected to the cloud, which allows even greater control and accuracy in their tasks.
Challenges such as public perception, security and law enforcement will have to be addressed, including in the supply chain. However, experts indicate a promising future for this area.
The use of robots in the supply chain is still at an early stage, but promises to offer many facilities to companies.
New technologies influence much of our daily activities. And one of them has been standing out in our days: podcasts.
Similar to a radio program, but with the hability to run anytime, anywhere, podcasting is a tool that can help any professional in the purchasing department to gain repertoire, besides being a source of new ideas.
It is not by chance that the consumption of this media grew 67% in Brazil, considering the interval of only one year, according to a survey by Deezer (a company in the sector), 25% of the interviewees said they listened to more than one hour of these audios a day.
The benefits of Podcasts
But why is this media so successful, whether for fun, study or professional updating?
They are free, have no ads to interrupt the broadcast and are available on and offline. In addition to these facilities, there are other good reasons to incorporate podcasts into your routine – we listed a few:
It improves knowledge and exercises the brain
According to studies by Sage Publications, our brains notice no difference between hearing and reading content. Both ways allow you to acquire knowledge – of course, continuously reading will always be very important to improve writing, for example.
In addition, it allows you to exercise your brain, as by listening, we build images to help you retain information – to learn more about brain functioning, read the article about the Triune Brain!
It provides variety of information
There are so many different podcasts in various different platforms that practically all subjects can be found in this format. That is the case, for example, of podcasts for the purchasing department.
It allows multitasking
Want to listen to quality content while you organize your emails or organize your agenda for the day? Podcasts may be the best solution for that, by allowing you to gain time and productivity!
One of the reasons is that podcasts can be listened to in many situations: in traffic, during sports practice or even in the waiting room, while waiting for a negotiation to start.
8 podcasts not to be missed for the shopping sector
Below we separate 8 podcast options dedicated to the purchasing sector. They offer market data, a collection of interviews that are capable of bringing new ideas to your work and technology.
Topics such as Artificial Intelligence and Negotiation Techniques are part of the varied menu of this podcast that presents research, news and works on the purchasing sector – the interviews and debates from the community also encourage reflections on the purchasing career.
It is possible to download the application and create segmented playlists, which makes it easier to create a specific learning trail for each person’s needs.
This podcast led by Sarah Barnes Humphrey, a supply chain consultant, uses the interview format to discuss with professionals – who are a reference in the supply chain – the best practices in the industry, market trends and other details.
Within the audio options, the Women in Supply Chain series is a great highlight, focusing on workday challenges women face in the area.
Updated weekly, the more than 430 podcasts cover advanced technology, augmented reality, 3D simulation, the internet of things, Big Data analysis, cyber security and global supply chains.
This podcast stands out because they analyze the impacts of technology on the supply chain and the role of cyber security to achieve the best possible performance in the purchasing industry.
This podcast is focused on discussing tactics, strategies and cases with a track record of successful negotiations, including showing effective strategies to negotiate.
The site offers detailed information on each audio, with a brief summary of the content, participant information and even contact details for each individual cited in the podcast – so you can get in touch with the greatest trading specialists in the market!
The varied repertoire of this podcast includes: contract management tips, procurement planning, the importance of communication and teamwork, or reflections on how economics and politics interfere with the procurement landscape.
Current issues, such as Covid-19, are also on the list of the American, and experienced procurement professional, David Byrne.
The company that develops software for the purchasing area, uses all its experience in the sector to produce content relevant to daily purchases. Technology, costs, compliance, supplier management and interviews with experts make the collection unmissable.
Philip Ideson, responsible for creating a global community with thousands of procurement executives, leads this podcast ranging from interviews with leading professionals in the field to information aimed at improving industry performance and building stronger business partnerships.
You can check out the list of the most popular podcasts – podcasts on the role of purchasing in overcoming the current economic crisis are among them – or search for topics of interest.
8. Sap Ariba
This is a series of 10 podcasts on digital transformation in purchasing, with the participation of 10 experienced industry leaders, anchored by Eric Kavanagh, strategic consultant to the United Nations. From the changing role of procurement to the role of emerging technologies, they reveal what it takes to succeed in today’s marketplace procurement.
Following the podcasts for the purchasing department will provide insights into your work routine.
But if you want to optimize the purchasing process in your company, stay on top of the content available in Soluparts’ blog, starting with the article we selected below:
In recent months, global economic activity has undergone severe changes as a result of the Covid-19 pandemic.
Modern supply chains have also been impacted, so much so that for the World Economic Forum, this crisis revealed the fragility of the supply chain, in view of the difficulties faced by governments, businesses and consumers in obtaining basic products and materials due to the total lockdown policies implemented by many countries.
The report published by The Economist – Intelligence Unit (EIU) predicts significant changes for different sectors of the global economy and, consequently, for supply chains.
In this article, the main challenges raised by the authors of this material will be discussed, as well as forecasts from other experts in the field.
Challenges for global supply chains
The EIU claims that the global economy has become dependent on China since its inclusion in the World Trade Organization in 2001.
This is because companies have approached the Chinese market as a place for production, mainly because of its cheap labor and source of demand – ores, oil and agricultural products are some items that place China as Brazil’s largest trading partner, for example. In some trade sectors, the participation of this emerging country exceeds 50%.
However, it is expected that this scenario we know will probably change. Even some areas were already moving their operations to other Asian countries as a result of the increase in Chinese workers’ wages and the trade war between the country and the United States.
The pandemic will force other sectors to make the same decision, with the relocation of parts of their supply chains. What we will see is a network of chains less focused on China, more diverse, and a possible movement to be replicated in other regions of the world.
Supply chains are difficult to change, especially for some sectors (such as automotive), but the development of regional chains is a solution to face difficulties, making organizations less prone to possible collapse and crisis. Companies that already had this diversification were able to change production stages from one region to another during plant closures during the lockdown period.
Another concern will be the organization of production time and product assembly along the chain, in addition to the storage of final and intermediate goods in strategic locations of easy access – it is worth remembering that, even though it is very important, the reduction of expenses in production and transportation must be well thought out and planned, so as not to compromise the efficiency of the entire production chain process.
Post COVID-19 Supply Chain: possible answers
The time is still uncertain, but there are some possibilities that may ease the obstacles in supply chain, brought by the crisis caused by the new coronavirus.
1. Scenario planning
In a slowing global economy, with increasing risks in trade (reduced sales, closure of establishments, loss of jobs, changing consumer habits, etc.), scenario planning and the use of technological tools to accomplish it become more recurrent, in order for companies to deal with the impacts of the pandemic. The COVID-19 outbreak generated plant closures and supply disruptions, but the impact of this crisis on the global economy is not limited to these issues.
The Economist Intelligence Unit’s forecasts indicate that we should experience the largest recession since the 2008 financial crisis, with a slow recovery and a projected reduction in demand for goods and services by 2020. Thus, planning techniques are relevant to prevent impacts on supply chains, such as adapting goods to markets where consumption possibilities are higher or switching suppliers.
2. Digitization of business models
Companies are changing their business models to one that is more technological by necessity and opportunity. The online shopping habits created by consumers in 2020 are likely to endure, and it is important for companies to rethink their digital presence and map efficient ways to deliver products and services to their customers.
The report published by the World Trade Organization also discusses this issue, suggesting increased investment in virtual shopping platforms (e-commerce).
In addition, more and more data will be used in the production process, promoting an increase in the digitalization of supply chains, and making them more intelligent. However, these changes will bring challenges as countries have different information systems and customs control procedures.
Suppliers will also need to disclose their data, but this may generate privacy and competition problems.
3. From tactics to strategy
The adoption of a greater digital presence is a tactic in response to the current pandemic – and companies already aligned with the technological revolution proposed by Industry 4.0, are ahead. However, organizations will have to define a medium and long term strategic planning in face of the “new normal”.
For manufacturing and consumer goods companies (including small and medium enterprises), it will be an opportunity to participate in regional supply chains due to the restructuring that will occur in global networks.
It may also be a time for price models to be rethought, since the regionalization of supply chains and the increase of strategic stocks will lead to an increase in the final value of products, challenging competitiveness among competitors.
4. Bringing risk to the core of the business
The latest impact cited in the EIU report relates to concern about risk management, which should be maintained after this current period. Even before the pandemic, the global economy was surrounded by uncertainties and geopolitical issues were already influencing the scenario.
The US-China trade war, for example, shows how conflicts between actors impact the economic environment and can continue regardless of the results of the US elections in 2020 as a result of competition over technological domination.
Climate change will also have an impact, and it is crucial to manage risks in the face of threats to business operations.
Other future prospects
The EIU report reinforces the discussion by experts in the field about the future of supply chains. In an article published on the Forbes magazine website, Michael Mandel, economic strategist at the Progressive Policy Institute, also advocates changes in supply chains, making them simpler and shorter in order to contribute to sustainable production. Mandel explains that when chains are more complex, it becomes more difficult to keep up with emissions of polluting gases, to cite just one difficulty.
On the other hand, The PwC consultancy states that changes in business models, focused on the circular economy (a concept based on education, reuse, recovery and recycling of materials, including passing items from one industry to another, aiming at extending their life cycle) and the creation of shared value and sustainability – when physical, intellectual and human resources are shared among several organizations – will promote changes in global supply chains, maximizing the use of resources and the lifetime of products and services to ensure, satisfy and align consumer expectations.
In this article, we show what to expect from post-Covid-19 supply chains, which will become more regional, digital and sustainable.
Thus, working with foreign suppliers remains a very important option and having a company specialized in indirect material procurement may be the best way to keep this practice secure.
Present in five countries and having contact with the main suppliers in the world, Soluparts will optimize your purchasing process. Talk to one of our experts to clarify your doubts.
With globalization – even as it is slowing down – and the digital transformation, the supply chain is becoming increasingly complex, increasing the pressures for a more modern and efficient process.
Therefore, it is essential to have an intelligent supply chain that exploits the digital and technological resources available today. Understand this scenario better with the following article.
Supply chain challenges in digital transformation
The spread of Industry 4.0 technologies has revolutionized supply chains that are already using the Internet of Things (IoT), automation, artificial intelligence and real-time analysis to optimize, accelerate and predict their operations.
In this scenario, many companies are already rethinking their logistics, taking advantage of digital technologies – and new rules, such as Incoterms 2020 – to keep pace with change and improve their operational capabilities.
Moving from a traditional supply chain to implementing a digital, intelligent format requires a major transformation.
To prepare for this moment, get to know the technological elements that are at your disposal.
Elements of a smart supply chain
Much has been said about using Bots, Artificial Intelligence and Machine Learning to make the supply chain more efficient – about this subject, we wrote an article that shows 4 technologies that are revolutionizing global trade.
All of them are very important indeed. But there are other resources available, like the ones we highlight below.
1. RFID – Radio Frequency Identification
The RFID system consists of an antenna, a transceiver (which reads the signal and transfers the information to a reader device) and an RF (radio frequency) tag, which contains the information to be transmitted – these tags may be present on products, parts, equipment, etc.
It works like this: the antenna emits a signal from the integrated circuit and transmits the information to the reader. It in turn converts the RFID radio waves into digital information, which can be read by a computer, storing this data.
Thus, it ensures professionals can control everything that enters and leaves the factory, which in turn guarantees the updated control of the stock – in real time – and makes tracking the materials a lot easier.
2. Smart sensors
As they are an excellent support for an intelligent supply chain, the sensors make it possible to monitor machines in real time, sending alerts to a control center if any part is defective and needs to be replaced – or even when the production period for any part is coming to an end.
This way, it allows the realization of predictive maintenance, indicating the right time for the acquisition of parts and products. In addition to cost reduction, it increases production efficiency, since it reduces the risks of having to stop the machines for maintenance.
It may sound complex, but tests are already being done using drones for delivery. Besides delivering orders to the buyer’s house, another possibility is the distribution from a truck which, upon arrival at a certain point of its route, releases several drones to deliver orders to places close to the stop.
Using a drone equipped with a camera to scan the items from a stock is also a possible way to improve controls and processes.
Repetitive tasks such as moving products from one area to another from a warehouse can be done with the help of robots, increasing efficiency and freeing up employees for more strategic work.
Amazon Robotics invested in this feature, reducing errors and costs (before, it was common for products and materials to be stored in the wrong place, leading to unnecessary purchase of items already in stock) in addition to improving efficiency – learn about the Kiva system that allowed the use of robotics in the company’s warehouses.
5. Process Integration
An intelligent supply chain needs to integrate steps and teams, creating a real-time communication that can be used by everyone in the production process.
This integration will promote improved communication, anticipation of problems, greater agility in detecting and solving failures. It also favors access to essential data to define strategies and control demands more effectively.
The market offers several options that need to be evaluated according to the needs and particularities of each organization. With Business Intelligence, information from systems in all areas and technologies – such as the Internet of Things – goes to the same dashboard, generating graphs and tables and allowing linked teams to follow the entire process together in real time – in the case of the supply chain, maintenance, purchasing and logistics would share the information in the same dashboard.
Implementing a smart supply chain in your company
The acquisition of new technologies requires good planning, avoiding risks such as acquiring items that do not offer a positive cost-benefit ratio or that are not really necessary for the reality of the business.
And although your journey towards a digital supply chain may require the best and most advanced technologies, remember that much of the success of this operation is connected to people. Companies need to take their employees with them at each stage, preparing their workforce for this new supply chain, through training, for example.
With these precautions, it’ll be possible to see many benefits in the supply chain, some of them being:
- Greater efficiency: better use of productive process time, minimized errors.
- Transparency: an intelligent supply chain allows information to be shared with all stakeholders in real time;
- Properly distributed resources: adequate quantity of parts, avoiding inactive stock or material shortages.
An intelligent supply chain can, for example, integrate data from sensors connected in warehouses and warehouses with information that shows the use of parts, allowing a purchase planning that leads to cost reduction and higher quality throughout the purchasing process.
Supplier mapping is a key task for medium and large companies – and it’s also one of the biggest challenges in the supply chain. When choosing a supplier, a company must take a lot of things into consideration, such as price, deadlines, size of each demand and the commitment of the supplier to the company’s needs.
The entire production depends directly on the choices made in the assembly of the supply chain, which means that the productivity of the company is linked intrinsically to the quality level of the suppliers. Choosing a wrong supplier can, basically, ruin everything.
With that said, it’s not unusual to question how things are done in your company when it comes to mapping suppliers. If you’re not satisfied with the methods used, or if you feel like a change is much needed, this article is for you!
There are some fundamental points that can help prevent failures and problems, but only when there’s perfect alignment between the company and its suppliers. Needless to say, any small disagreement can compromise the whole process and result in unimaginable damage.
Check out below our 4 tips for mapping suppliers assertively and securely, and make sure to follow each one of them!
Know your demand very well
The first step in supplier mapping is to thoroughly understand every demand that arrives in the hands of the purchasing department.
Here, you want to determine quantities, delivery terms, deadlines that need to be met, and, in sum, all issues involved in the order. With that information in hand, you can align your demand with the service each supplier offers and then choose the one that best fits your needs and conditions.
In addition, by knowing the demands well you can identify possible barriers to product or service delivery – such as quantity, format or assembly errors – and plan yourself ahead to solve those issues.
Besides, if you have a very large demand, you can hire more than one supplier for the job, to avoid overwhelming one vendor with more work than it can handle, and ensure on-time delivery!
Finally, define which demands are priorities, and which you can deal with later, to better organize supplier analysis and deadlines.
Develop a supply schedule
It is essential to have all the purchasing movement very well organized: what is the status of each demand, which supplier is responsible for each one, what are the terms and conditions of delivery, etc.
To do this, develop a method to follow each step of the process, a supply schedule. In it, enter all the essential information to follow the progress of each demand.
You want to keep tabs on order dates, delivery forecasts, deadlines, the responsible suppliers, essential delivery conditions, any additional services that will be provided on delivery and other observations you deem necessary!
Make sure to adjust your schedule when necessary. Take changes and/or additions to the order into account, and any other situations that can delay delivery.
Be familiar with the values of each supplier
It is obvious that prices and deadlines are fundamental, but some other points must influence your choice of supplier just as much, or even more. When mapping suppliers, make sure to know every aspect of the company, not just what they choose to show you.
Have as much information as possible about the service that each supplier offers. Some can literally save your business! For example:
It is essential to hire suppliers whose values are consonant with the ones of your company. Here, you want to do extensive research considering: does the supplier have a high level of quality that is recognized in the market? Are they in labor proceedings or having contract problems? What are the company’s social policies? How do they deal with environmental issues?
All of these answers should be in accordance with your company’s policies, with the image you want to imprint on your customers. A supplier who disagrees with your values can cause conflicts not only with you while doing business, but also with your customers, who may question your company’s positions. Do not risk it!
Once you find a supplier that is a good addition to your mission, stay true to standard corporate processes and guidelines! Always be consistent, and your suppliers will tend to keep that behavior as well.
Automate the relationship
The most common way of organizing information is to use spreadsheets and tables, but it is common knowledge that any type of manual control is subject to failure. Above all, spreadsheets rely on employees to update them and each of the employee’s routine can lead them to forget to fill in properly, or worse: enter incorrect information.
To avoid this type of situation, it is advisable to make use of softwares specially developed for this phase of the supply chain. There are options that allow you to constantly monitor each supplier’s performance, calculate risks and possible delays, generate reports, compare conditions and much more!
By making the relationship with the suppliers easier, you enable better exchange of information between the parties, so that improvements can be put into practice without much complication.
Don’t try to find the “perfect supplier”
Now, here is the thing: there is no such thing as a perfect supplier, or a perfect contract, let alone a perfect business. But that only means you should always strive to find the best match for your needs.
Sometimes, the best option is the one that has the lowest price, or is the biggest and best known company. But sometimes the best supplier is the one that may not offer the better price, but has the best values and/or the best and easiest crew to deal with.
The secret here is to always try to find a balance between all of the qualities you look for in a supplier partnership and all of the “not so good things” you are willing to accept to close the deal!
Regardless, following the tips we listed in this article will definitely make the entire process of supplier mapping easier and much more assertive at your company.
Do you have different tips to offer in this subject? Leave it below in the comment box!
An efficient management of the supply chain is necessary for all companies that deal with product movement, whether purchasing or selling. Any business that produces or sells goods must be very aware of the entire process, from purchase to delivery, especially because internal organization can ensure higher levels of satisfaction with the buyers.
Basically, the supply chain is a group of methods that depend on one another, and require close cooperation between stages so that every action is controlled, managed, improved and executed successfully. Thus, a supply chain management model should include ways to provide better integration between the different stages in the supply chain, which means making sure that all of the logistical steps have the best performance.
Not only can accurate management promote satisfaction, but it can also be responsible for reducing the production cycle time, allowing the company to avoid waste of resources, improve the efficiency of the business and develop competitive advantage.
Want to improve the productivity in your company? We listed some key points one must be attentive to in order to best manage your supply chain! Check them out below:
Supply and demand
Specialists claim that it’s critical to maintain balance between supply and demand. The keyword here is forecast. The best method to anticipate demand is to look into the selling history, and take the future demand expectations from it. If you need to forecast the demand for December, go back a year, analyze the data, apply comparisons of growth or decrease, and there you’ll have the expectation for the month.
Keep supply on demand, especially if your company deals with perishable goods. That way, you don’t waste resources maintaining unnecessary inventory, that can become obsolete or be damaged, and save a lot of time when the goods are needed! Sometimes, that means keeping the lowest inventory levels possible, as the best policy to better control the storage costs, or implement a “just-in-time” process.
Selection and relationship with suppliers
Always partner with suppliers in which you see values that match those of your company. Don’t take into account only the fame or size of the supplier’s company – it’s more important to determine if they are able to help you develop and improve the quality and efficiency of your business. Sometimes, a smaller company can represent much more commitment and innovation than a big corporation.
Always strive to maintain a close relationship with your suppliers, being transparent about your company’s needs and expectations, so that the deliveries can match your standards. If something goes wrong, it’s easier to solve a problem with a partner who knows you and that you know well, than to deal with someone you don’t know what to expect from.
Sharing the processes with the suppliers is a good way to keep a good communication channel. Allow your suppliers to access your data bases and also keep tabs on the other stages of manufacturing and storage. By doing this, the supplier can work in sync with your company, improving the quality of the final delivery.
Manufacturing, storage and product delivery
The key to a good supply chain management is integration. It’s very important that sales projections are made accordingly to the strategic planning of the other steps, such as production, department budgets, investments and operation planning.
There are plenty of ways to ensure integration in the supply chain. One good method to keep all steps coordinated is to use the same software to manage the supply chain, so that everyone involved can receive up to date information. One of the biggest concerns about managing the supply chain is the lack of communication between the stages, but the technology available can make this process quite easier.
It’s also critical that the procedures involved in the production line are documented, so that management can control the entire situation. First, it helps to establish quality standards, and also makes it easier to find gaps along the way.
But more important than that, the more information you have, the easier it becomes to recognize weaknesses and flaws. Our advice here is to gather all the data one possibly can about the company’s (and the competition’s) operations, and analyze those numbers. By doing that, it’s possible to identify, solve and even predict possible problems and conflicts faster.
If one step fails, the entire supply chain process is impacted. Thus, it’s really important that performance indicators are followed, to monitor the activities of every part involved in the supply chain. It’s important to say that some companies find it best to outsource some steps, or all of them (from production to transportation). But even if that’s your situation, it’s essential to know how the entire process must go, to maintain the company’s quality standard!
To sum up this article, here’s a list to help you better manage the supply chain in your company. One should keep tabs on the following steps – how it should work, how it actually works and how the process can be improved:
1. Demand forecast and product offer
2. Location of suppliers
3. Manufacturing process
4. Product storage
Besides those 4 primary steps, here’s 3 checking points that can indicate the success or failure of the supply chain management:
1. Product delivery
2. Merchandise return
3. Customer feedbacks
As we’ve shown you, it’s fundamental to keep in mind that the supply chain management is a process, and as such, it cannot be treated separately. It’s true that a lot of companies have been investing in creating a supply chain management department for some time now, but remember: designating one person to worry only about the supply chain is supposed to make the process run more easily, instead of adding more complications and obstacles to the equation.
It’s all about the relationship between the company and its suppliers, so the manager must take into consideration that the entire experience has to be shared by everyone involved, balancing responsibilities and ensuring the highest quality levels possible!
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