Optimizing
the procurement and inbound supply processes would mean streamlining all those
direct processes involved in purchasing and accounting. We have to implement a
real time business network which enables a collaborative relationship between
all the stakeholders involved in the process such as the manufacturers, suppliers,
logistic providers etc. This will help
in improving the decision-making process, increase resilience and take the
business value to another level for all the parties involved.
Direct
materials are those which directly goes into making the finished goods. Many
manufacturers have to find the trade off between increasing costs (from high
inventory levels) and out of stock situations (leading to lost production time,
high logistics costs etc.). The high inventory cost is due to excess inventory
and not carrying the right materials which eventually leads to high transportation
costs.
Another challenge
would be long lead times with respect to the suppliers which will influence the
responsiveness of the firm. A communication lag will be present as we go down
the supply chain that results in a phenomenon known as bullwhip effect. Companies should aim for zero-time lags that will ensure all needs are being met at the
desired levels.
With this
current market, the company should ensure a resilient supply process that does break
the continuity and minimized disruptions. This part would require onboarding
efficient suppliers across the world, ramping your supply network with respect
to the demand and supply changes and other external interferences.
Quality of
your order forecast is to be looked at keenly looked at for evaluating both parties,
thereby make the suppliers accountable for their supply performance.
Another
major barrier for this inbound supply process is the state of the current the
current system which may be comprising of the many separate, siloed systems in
place. This would be one of initials tasks to be looked at before revamping the
whole process, without which all the improvements would have no value.
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