Today’s increasingly global business landscape has resulted in a marketplace where suppliers, manufacturers and customers often are located in completely different countries and even on different continents. The pressure on companies to adapt and excel in this new environment is constant. In a recent survey conducted by Aberdeen Group, respondents cited the rising complexity and globalization of operations as their top business pressure, followed by the need to improve supply chain operational speed and accuracy.
Advancements in transportation technologies have made it possible to effectively outsource operations to distant regions. However, the process of managing various global vendors across the supply chain requires the integration of advanced supplier management technologies. Looking back 20 or 30 years, supplier management was as simple as picking up the phone and calling a supplier located within a few miles of a manufacturing facility to check on an important order or inquire about a last-minute request. Many times companies were dependent on their local suppliers, and if they did not have the capacity to address a request, production would have to wait. How things have changed.
With intense global competition, changing consumer expectations and demands for goods, and access to more markets than ever, suppliers and manufacturers aggressively compete to provide products and services in the fastest and most cost-effective manner possible. This has resulted in a multistep process that no longer is a unidirectional supply chain, but a dynamic supply network made up of a number of players performing various functions. These networks more closely resemble a hub and spoke model versus the continuous stream of the old supplier network model. Within this network, all of the players are interdependent, reliant on each other to produce deliverables in a seamless, consistent and timely manner.
The complexity of these relationships and the nature of the modern supply network mean that companies face a number of challenges associated with distance, varying time zones, accommodating diverse cultural landscapes, potential supply chain disruptions, rising wages in some developing countries, infrastructure challenges, currency fluctuations, political risks and natural disasters. In addition to these supply network challenges, without the right technology, companies struggle from a lack of a unified view of their inbound network. Without the right supplier management solution, these challenges can result in ineffective communication and insufficient visibility leading to errors and delays in the network.
The following are highlighted examples of the types of supplier management technologies and solutions that are utilized today by companies participating in international sourcing and looking to reduce lead times and inventory, increase speed to market and optimize shipments.
Cloud technology arguably is the most important recent advancement in supplier management technology and the reason companies can now look at their supply chain as a supply network. Prior to the proliferation of cloud-based technologies, companies did not have access to supplier management solutions that could provide the near real-time visibility required to efficiently manage complex supply networks across multiple continents and time zones.
Now companies are beginning to look to the cloud for opportunities to improve supply chain collaboration and reduce operational inefficiencies. Through scalable cloud-based supply chain management technologies, companies are not only streamlining the management of vendors, but also managing all of their inbound shipments via a single platform. This level of collaboration and visibility provides insights and predictability into companies’ operations and also reveal potential cost savings by identifying opportunities to consolidate ocean freight shipments and improve container usage.
Socializing the Network
Recently, UPS enhanced its Order Watch supplier management platform with cloud-based technology, providing customers with greater control and near-real time visibility of their supply networks. To understand the way cloud-based supplier solutions enhance business operations, think about social media. With cloud-based supplier management platforms, the customer’s supply network tracking site is like an individual’s Facebook account. The customer can go to this platform and see the information that is uploaded (or yet to be uploaded) by their supplier network, including whether purchase orders or proper manifests have been submitted, or if a supplier has scheduled an order and whether that order has shipped.
This level of information is available across the supply chain to the final stage when shipments are received at the customer’s warehouse or distribution facility. The suppliers involved in the movement can see these details too, however only the aspects that are relevant to their role in the network. Much like privacy settings, the UPS Supplier Management solution allows companies to customize the level of visibility for their suppliers as well.
In addition to the increased visibility enabled through cloud technologies, supplier management solutions that allow companies to be more proactive are key to the successful management of today’s global supply networks, especially for companies that are looking to reduce costs by reducing inventory levels. Supplier management solutions, such as the UPS Order Watch platform, feature automated exception management. This means the solution dispatches system-generated exception alerts to encourage adherence to specific customer requirements.
By proactively alerting companies to these exceptions, supplier management platforms allow companies to better anticipate and plan for their production by providing foresight into potential delays stemming from improper paperwork or incorrect shipments. Additionally, supplier management platforms that aggregate historical knowledge of supplier reliability and other behaviors can help customers to more accurately plan their supply network and anticipate timing. At UPS, we run historical reports with vendors to provide our supplier management customers with information around timeliness of shipments and document delivery.
A Modern Network
Transforming a company’s supply chain to a supply network is no easy task but can be made easier with the right tools and technologies in place. These are just a few of the advancements in supplier management tools that are enabling companies to view and operate their complex international supply chains as supply networks.
Companies interested in truly transforming their supply chain into a supply network via the use of a supplier management tool should look for a provider that is proficient in vendor compliance, order management, global information management, global distribution management and transportation management. A supplier management partner with an understanding of global supplier networks and logistics has the ability to deeply understand a company’s entire supply chain and is more likely to anticipate needs and provide flexible solutions to adapt to those needs. Regardless of how companies adopt supplier management platforms, integrating a modern supplier management system into a complex global supply chain is key for companies looking to stay ahead of their competition and meet their customers’ needs.
Tom Boike is vice president of supplier management at UPS. Boike has more than 20 years of experience in logistics information systems.