Working in Harmony with Suppliers is Easier with SCO
As the complexity of the average supply chain grows, collaborating effectively with suppliers is becoming increasingly challenging.
A PwC survey of 209 global companies revealed that 95% agreed discrepancies between supply chain entities have increased in the past three years. It also found that 94% reported changes in the extended supply chain network configuration occur more frequently, and 74% agreed that the number of entities in the supply chain has increased.
We have already looked at how Supply Chain Orchestration (SCO) can help you serve your customers and boost your aftermarket performance. In this final post of our four-part series, we’re going to look at how SCO strengthens collaborations with your suppliers.
When retailers, manufacturers, or distributors talk to their suppliers about fulfilling orders it’s not always a straightforward process. In an ideal world, you’d ask for 1,000 units and the supplier would confirm that they have them and keep you updated on delivery. The reality is usually more complex.
Perhaps they have 200 units ready to send now, with some in production, so 400 could ship next Thursday, and the remaining 400 would be ready to ship the following Tuesday. They may only have 300 ready to ship and the other 700 will have to be manufactured, which would mean a much longer lead time. Couple this with potentially longer global supply chains and transit times, and this supply chain visibility is critical. SCO provides you with insight into what’s available, what’s in production (including key production steps), what has been shipped, and where it is in transit.
It can also help you to maintain visibility and work to fulfill your customer’s order. Sometimes a wholesaler will confirm an order, but fail to explain that only ten of the 15 you ordered have actually been shipped. If you only find out when the shipment arrives at the dock, that may be too late and you’ll have to incur extra cost to expedite the shortfall. Supply Chain Orchestration provides visibility into what has shipped, the quantity, and where it is in transit. That way you can meet your commitments and provide solid delivery estimates to your customers.
Vendor Managed Inventory
Instead of estimating a production schedule and ordering inventory stock ups accordingly, it can be beneficial to share real-time stock levels and consumption with suppliers. With SCO, you can share a feed and dictate inventory levels. For example, you could set a minimum of 20 units and a maximum of 40 units, to ensure that the vendor keeps you stocked and the production line never slows.
This also means that you don’t have to hold inventory, it shifts the responsibility to the vendor to keep you apprised of any potential shortfalls, so you can then take action. this is a more effective way of ensuring assembly lines run smoothly.
Ultimately, across all of our examples, SCO is about improving visibility into every facet of your supply chain including vendor managed inventory and enabling the flexibility and control you need to hit your performance and cost targets.
This dramatically reduces the risk of unwelcome surprises for you and your customers, provides better cost transparency, and ensures that you can always provide the best service possible.