Tuesday, October 6, 2020

Main Challenges in Procurement and Inbound Supply Process

 


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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