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Importance of End-to-End Purchase Order Visibility

17 December 2022

"Supply issues ... is on a gradual rise, having more than doubled in magnitude annually for the past two years... market volatility has turned that dependency into vulnerability, disrupting supply lines for commodities and raw materials...Supply instability has been on a steady rise over the past two years due to market volatility's direct impact on supply chain globalization. Assuming a continuation of this trend, commodity and material constraints can only worsen".
(KPMG and ASCM latest September 2022 report - "Seeking supply chain stability in an era of volatility - The rising frequency and intensity of crises call for new insights"...)

Importance of End-to-End Purchase Order Visibility
End-to-End PO visibility

End-to-end PO visibility is one of the most important aspects of any supply chain operation. Having a clear picture of what your purchase order life cycle looks like is essential. This can be used for strategic planning, business analysis, supplier performance KPI’s and day-to-day operations. End to End PO visibility are complex networks that involve many different parties and processes. Unfortunately, purchase orders are often not as transparent as they could be, leading to inventory management control problems and delivery delays. One way to improve purchase order visibility is through advanced digital tools that provide end-to-end visibility across suppliers, third parties, factories, and distributors. These tools allow you to track product availability at every point along the purchase order — from PO placement through the supplier manufacturing processes to when it arrives at your doorstep. It is the easiest way to ensure on-time deliveries and meet expected suppliers KPI’s. It is a must for any business that wants to improve its bottom line and ensure supply chain resilience. It is one of the essential concepts in supply management, but not many people talk about it. Once you understand what end-to-end purchase order means and why it is so important, you will realize how much you can improve your company's efficiency and profitability by implementing a supply chain visibility program today.

Importance of End-to-End Purchase Order Visibility
Improved Collaboration:
Industries spend more time and money on communication mechanisms with suppliers that are not effective. To improve their performance, they need 24/7 sharing and updating data on purchase orders, manufacturing processes, and deliveries. Using supplier collaboration tools, AI and ML algorithms will allow them to track suppliers’ PO life cycle immediately, do in-depth performance analysis to predict problems in delivery schedules, and anticipate solutions to avoid running out of supplies.

Supplier Portal for Improved Collaboration (Click to enlarge)

A supplier portal allows buyers and suppliers to collaborate and communicate changes to each other quickly in a shared environment connected to the company's ERP system and allows automatic updates of supplier data and confirmations.

Suppliers Lead Time
Supplier Lead Time is the time that typically elapses between when a supplier receives an order and when the order is shipped. Most enterprise purchasing systems enter supplier lead times upon the supplier agreement signature. They are kept as static data on a part level that is not updated frequently or at all. Since supplier lead time plays a critical role in the timing and sizing of purchase order decisions, many purchasing professionals have recognized this importance. They are looking to accurately predict lead times and develop strategies for coping with problems created by lead time variations.

Part Number Data (Click to enlarge)

Improved demand planning
Manufacturers are at the top of the purchase order and rely on their downstream partners to deliver goods on time to consumers. Markets' purchasing habits change all the time, making production planning difficult—seasonality in purchasing trends aids manufacturers in anticipating spikes in demand. However, marketing and business considerations must also be factored into production schedules. For instance, before launching a special offer, manufacturing departments must ensure enough product is on store shelves for consumers. Manufacturers must rely on a wide range of data to ensure successful production. Vendor performance, as measured by on-time delivery and inventory levels. Accurate demand schedules can be easily created and potential losses avoided by having visibility into related data collected at every stage of the purchase order process.

Part Number Routing (Click to enlarge)

Visibility aids risk management
The world of today is becoming more complex and interconnected. Purchase orders are growing in length and complexity. To keep shipments on track, you must collaborate with an ever-increasing number of stakeholders, from suppliers to ocean carriers. When there is a disruption in one step of the purchase order, it causes a ripple effect. End-to-end PO visibility, enabled by real-time data on each step of the purchase order, assists supply chains in detecting risks and adapting before problems arise.

Visibility makes the supply chain more resilient
Visibility can assist supply chain teams in identifying inherent suppliers and purchase order risks and developing contingencies in place, in addition to detecting immediate risks such as production delays and capacity issues. Structural issues emerge, whether related to your suppliers' capabilities or the inherent complexity of the markets in which you operate. You can strengthen your defenses if you understand your vulnerabilities. You regain control in even the most difficult situations by creating contingencies for high-risk steps in your supply chain.

More visible and long-lasting
Building sustainable chains require visibility. Supply chain stakeholders must work to demystify delivery processes as customers become more aware of their goods' origin and manufacturing conditions. Tracking condition-related data is a significant first step. Still, access to it must be made available to everyone in the organization if it is to reach its full potential.

Key Takeaways

    1. End-to-end PO visibility is one of the most important aspects of any supply chain team operations. A clear picture of your purchase order life cycle is crucial.

    2. In order to improve their performance, supply chain teams need 24/7 sharing and updating data from suppliers on purchase orders, manufacturing processes, and deliveries.

    3. Visibility can assist businesses in identifying inherent purchase order risks and developing contingencies in place, in addition to detecting immediate risks such as production delays and capacity issues.