If a business is not continuously conducting a surveillance on its suppliers, there's a solid chance the supply chain is not performing as well as it could be. The problem is that, as the number of channels to connect and communicate continues to increases, companies are finding themselves enlisting the help of more vendors to help manage various operations and needs.
Unfortunately, when a company is using an extensive list of suppliers - all of which are operating in silos using fragmented and outdated systems - it's almost a guarantee that the supply chain is missing out on opportunities to increase efficiency. Consolidating supply chain management to be overseen by a single vendor, or even a few key partners, can help optimize and stream flow production in a more cost-effective way than it otherwise would be.
By reducing the number of suppliers in their respective networks, supply chain managers can benefit from more visibility and control, process improvement, better integration and collaboration, stronger supplier relationship management and improved customer service. Below are some of the most important functions that can be especially challenging for companies - and how vendor consolidation can help make managing them easier.
Sourcing, training and using IT tools and software
One of the strategies many companies have started using is making more investments in technology systems. And while automation and computerized processes can surely help speed up production, eliminate inefficiencies and inaccuracies, and free up workers to focus on more pressing areas of business, the benefits won't be realized unless it is correctly implemented. Some supply chain managers deploy a new system or technology before they have been given - then passed on - the proper training. Eager to move away from outdated and ineffective models, many have made the mistake of launching a new platform or process before the organization was prepared for it. A primary example of this was when Target Corp. prematurely deployed new supply chain management software that, ultimately, led to disruptions that forced it to close its stores in Canada.
Instead of using a different vendor for every need and application along the supply chain, businesses should leverage a partner that specializes in end-to-end solutions that can connect them with the right tools and technologies for every function - from procurement solutions to contract management.
Supplier monitoring, auditing and reporting
It is critical that businesses make sure that all suppliers are compliant with regulation standards and performing up to the expected level of quality. One mistake in inventory management, for example, can have ripple effects throughout the entire supply chain, causing costly disruptions and even threatening customer satisfaction and loyalty. Plus, it is also necessary to ensure each vendor is adhering to regulatory requirements to maximize risk mitigation efforts. The process of doing this is, of course, much easier when there are fewer suppliers in the network.
Material Handling and Logistics recently pointed out why so many supply chain managers are recruiting the help of a third-party logistics provider as a way to improve the efficiency of operations and reduce costs. Many organizations are facing pressure to enhance just-in-time inventory, implement technology systems that automate processes and increase the visibility, traceability, agility and transparency of their supply chains.
To successfully achieve any of these goals, businesses require access to real-time data and analytics, better forecasting capabilities and digital systems that provide the exact solutions to meet their specific needs. As MH&L explained, a 3PL is an essential vendor that supply chain managers can use to significantly improve all functions of inventory, delivery and distribution operations.
Choosing the right supply chain solutions partner
Regardless of the industry, a business needs to remember that choosing vendors should be more about quality than quantity. When looking for a consulting and solutions provider for supply chain management and optimization, organizations should find one that specializes in all the above areas. This way, the company streamlines operations through one party that possesses the expertise, resources and time needed to find and onboard the best possible supplier and/or solution for the job.