In the business world, as in life, risk is always part of the equation. It is the unknown factor that has the power to change everything – either for the worst or for the best, but never with certainty. Although it can never be predicted, there are a number of measures that businesses can take in order to reduce the threats to their objectives and so to minimise risk.
In part 3 of the “Driving value through digital procurement” blog series we plan to talk about how technology and digitisation can help improve and reduce risk and effort in supplier management.
The main purpose of your supply chain is to find the most suitable supply partners (in terms of cost, quality and performance), to control and reduce risk and improve products and services jointly with your suppliers.
These would be the must-haves for any supply chain. But in order to make your supply chain efficient there are a few more things that should be taken into account:
- Do you have the right tools in place to speed up processes and reduce risk?
- Are you using data analysis tools to get real insights from your supply chain?
- Are you sharing the right information with all stakeholders involved in the process?
- Do you know which of your suppliers have the capability to help you produce innovations in your products and services?
Taking into account and improving all of the areas above can help drive efficiency into your supply chain.
Things seem pretty straight forward… so can there be any unforeseen issues? It’s all about providing the right product/service, with the right specifications, at the right place and time. The issue is all the “rights” can easily turn into “wrongs” as it can be difficult to maintain at the same time a steady supply flow while keeping the quality of the goods or services high and the costs at a reasonable level.
Companies must pay attention to these 5 problematic areas:
- Cost control
- Customer service
- Planning & risk management
- Supplier/partner relationship management
Supplier management is a key area here and we suggest thinking about the following when analysing your supplier base:
- How to maximize value when engaging with their suppliers
- Which suppliers provide a competitive advantage
- Which suppliers add value to both the business and the external customers
The Solution and the Benefits
New digital technology can play an important role to support companies in answering these questions and help organisations create a competitive advantage through their supply base.
Access to the right information at the right time can have fundamental importance when making important business decisions – not only in Supply Chain but throughout the whole organisation.
Digitising your supply chain can help you gain visibility and knowledge of your suppliers across the board in an ever increasing global environment. Because of the algorithms they are built on, digital tools can ensure compliance with policies and procedures and can help you better manage and reduce risk throughout your supply chain.
A digital supply chain can give procurement organisations more time and resources to focus on developing and maintaining relationships with strategic partners.
So, the question remains. Is digitalisation the way forward? We believe it is definitely part of the equation. In nowadays’ competitive and innovative environment, it is almost impossible to succeed without the help of digital tools. However, we do believe that digital tools alone are not the answer to bringing value to your procurement function. The focus should be on integrating these tools into existing processes and using the right talent at the right place in order to make the most out of them and help the business grow.