One contributing fact to these disruptions is that many industries are by nature reactive, basing their supplier management on manual intensive tasks and on assumptions, thereby acting only when products or PO’s are not delivered on time, or when they face out of stock issues.
When procurement is reactive, organizations are constantly chasing products, pasts dues, suppliers etc.
With the right mix of technology and methodology, companies can better manage such disruptions and gain 360° visibility and traceability with their suppliers. Achieving a healthy level of collaboration, visibility and traceability with suppliers is essential for gaining end to end po visibility – from factory to distribution center and a critical factor to building advanced prediction algorithms.
Predicting Suppliers' Late Deliveries The use of advanced prediction algorithms to foresee supplier's products/PO’s delivery problems, and not after they shut distribution lines down, has a great positive impact on achieving high level of supplier performance. Such prediction systems help set expectations and give supply chain managers the tools to make the right decisions to achieve On-Time In Full deliveries. IDAS ground breaking products prediction algorithm, is based on the analysis of four suppliers’ data inputs from various systems:
• Historical inbound shipments Data • Manufacturing data via the suppliers’ portal • PO confirmations in the supplier portal • Supplier portal updating trends
The algorithm study’s and analyzes the big data gathered from the systems, and provides a real time scoring index that is adjusted on a industry/customer/supplier level. The score index is grouped into 3 main levels: • Red < 65 Products/PO’s are late or will be late - Need immediate attention • Yellow > 65 <85 Products/PO’s have a chance to be late – Need some attention • Green > 85 Products/Po’s will On-Time In Full
This prediction system gives an indicator for products at suppliers and gives the tools to make the right decisions to achieve On-Time In Full deliveries, eliminate hidden costs of late products/PO’s delivered in short, redeploy labor from expediting to value-added activities and focus on growth and not resolving delivery issues. This is of huge potential to companies in the retail industry, especially those that rely on products/PO’s On-Time In Full deliveries, and will improve out of stock issues with the costs associated with such problems. It also resolves several pain points at strategic, operational, and tactical levels and makes an impact on all supply chain activities: from improving lead times to identifying ways to reduce the communication gap with suppliers. However, thanks to an ever-changing business landscape and in order to constantly achieve end to end po’s visibility, daily routine maintenance activities are required within your organization to ensure that your collaboration levels with suppliers stay as high as possible.
Communication, Communication, Communication. Don’t tell them, show them
IDAS six-step approach will help foster better collaboration and end to end po’s visibility with suppliers.
Step #1: Increase visibility and traceability with your suppliers by using online tools like user-friendly supplier portals for real-time PO confirmations. This will also help communicate accurate changes in your requirements in real-time, enabling all sides to adjust to constantly changing demands during times of crisis.
Step #2: Obtain accurate WIP and stock levels and products lead times from your suppliers. This will help you identify and analyze any potential shortages while also immediately fulfilling requirements that arise from your distribution centers when needed. If suppliers are reluctant to share such information, it is important to emphasize that this will be mutually beneficial and help grow their business with such strong customer support being demonstrated.
Step #3: Share as much information with your suppliers as possible. Share forecasts, news updates, and accounts payable information with your supplier online. This will increase supplier participation rates and overall information sharing.
Step #4: Provide small incentives for regularly participating suppliers. And, in turn, enforce penalties to non-conforming ones. A small incentive example could be ensuring payments for supplies are consistently made on-time. Another would be communicating a supplier’s importance to the accounting department, which can also avoid further disruption.
Step #5: Make sure all ranks within the organization have bought into the portal deployment and understand the goals and key performance indicator (KPI) targets. Supply chain managers, buyers and administrators are on the front lines, facing suppliers daily — they’re the ones that can convey the importance of 360° visibility and traceability to supplier contacts.
Step #6: Keep your portal as easy to use as possible for suppliers. Reduce the number of required inputs to the minimum needed, make validation messages crystal clear, and be sure that there are no special technical requirements needed (such as software downloads) to use the portal.
At the end of the day, transforming from a reactive methodology to achieving 360° visibility and traceability with suppliers, will help procurement teams in all operational aspects, Having less of: • Phone calls and e-mails to suppliers requesting confirming orders, checking delivery status, rescheduling to meet Material Requirements Planning (MRP) • Intake of unnecessary inventory too soon • Admitting that supplier lead times need to be updated in MRP • Maintaining Excel spreadsheets and reports to share supplier delivery, shortages, hot lists • Escalations to leadership • Conference calls and WebEx meetings with suppliers • Paying expedite fees • SCM shortages being the main reason for missed deliveries to the customerAnd more of : • Transparency of Supplier open orders • Share same PO information between MRP, supplier, buyer, planner and management • Predict which suppliers will be On-Time In Full (OTIF) before delivery is missed • Know inventory levels at your supplier • Know what the lead time for every part is • Access live order status from anywhere, anytime
It's time to become proactive!Talk to an Expert