Technology In The Supply Chain

In my last article on Supplier Management, I had covered the Evolution of e-procurement system and its impact. In this article I am gonna cover some more aspects on supplier management i.e. how it has become a necessity for any organization in today's scenario?

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The supply chain is a major function within an enterprise that encompasses a variety of processes and procedures with various departments to achieve success in delivering goods or services required by the customers.

Supply Chain Management (SCM) is an organizational process that focuses on leveraging all available resources such as internal staff , suppliers and distributors etc., to meet customer requirements at the lowest possible cost, maintaining quality levels that will satisfy the customer and finally making sure that the entire process complies with all legal, safety and environmental regulations.

With so many departments involved in the Supply Chain Management, it is very important for them to communicate effectively with each other so as to avoid any miscommunication or incompatibility between different processes.

Supply chain communication:-

When supply chains were simple contracts between a supplier and customer, communication was easy and direct. With changes in technology and business models, communication has become more complex. It is now essential for organizations engaging in traditional trading relationships or e-commerce to use structured communication mechanisms such as EDI (Electronic Data Interchange) , Electronic Mail etc., where both the sender as well as need an appropriate set of software tools to understand each other.

Supply chain visibility:-

With increased competition, organizations are trying to differentiate their product/service offerings by bringing new value propositions.

What this often means is that they can offer more to the customer at a lower cost or faster time than their competitors can do it themselves. This requires suppliers to be more responsive and flexible in order to meet the business demands of an organization. All this results into higher levels of supplier integration within the supply chain network resulting into need for visibility & transparency at all times.

Managing Supplier Compliance:-

It's important for organizations to manage compliance regulations among suppliers, especially in highly regulated industries like automotive , defense etc., where regulations are forth with respect to safety, security and compliance with environmental norms.

Supply chain compliance ensures supplier commitment to a certain set of standards, procedures and practices. Managers must determine which actions are required by the suppliers to meet the organizational goals and provide oversight on those actions to ensure they are being followed correctly. This is done through audits that check supplier processes against agreed-upon requirements or guidelines for quality, health & safety, sustainability etc.,

In today's competitive market place every organization have realized the need to have a single view of their customers from across all departments within an enterprise i.e., Finance, Sales, Marketing, Operations etc., Supplier management provides a centralized platform where you can connect all your internal as well as external partners for simplified communication. It also allows companies to build relationships with their suppliers and improve the efficiency of processes to ensure sustainable growth.

 

Supplier Management plays a very important role in any organization's growth. The above is a brief introduction on what SCM is and the need for effective communication amongst different departments of an organization as well as maintaining transparency with respect to legal, environmental & safety norms.