Many manufacturers and retailers still trust manual processes when ordering from suppliers as they believe that this is the only way to have complete control over their information. This habit however poses a major risk in the face of accelerating business changes and hides within it major inefficiencies, which translates to increased cost.
Says Neil McLaren, General Manager at
VSc Solutions, “The slow adoption of software that enables an integrated procurement system is due to perceived cost traditionally associated with it, as well as the lack of understanding of the value a collaborative platform can unlock.”
Industries and organisations have different procurement needs; it is impossible for traditional ERP/MRP solutions to cater for all such needs, and alterations to these solutions to meet specific operational requirements may be unaffordable.
In addition, the alterations may still not support or add value for the extended supply chain or stakeholders due to a lack of shared insights, which results in a negative impact on the cost versus value ratio. These solutions are, as a result, often reserved for high volume orders.
Not a simple decision
“Software as a Service (SaaS) however allows for economies of scale, collaboration across the entire supply chain and has, in some instances, made the functionality as affordable as a cellphone contract,” says Neil
Investing in technology that makes simpler, economical and faster business transactions across a supply chain possible is not a simple decision. It is however absolutely necessary for any organisation that wants to make decisions based on actual operational activity.
“The days of picking a specific ERP / MRP to cater for all your needs are over,” he advises. “Organisations should instead utilise what is available for the specific function and integrate supporting applications. In doing so they will organically build a so-called procurement ecosystem.
“Knowledge Integration Networks allow organisations to collate information from a variety of systems,” Neil adds. “This enables cost saving measures like accurate forecasting and invoicing based on central information and a ‘capture once, if at all’ approach. It also helps to speed up the ordering process and eliminates data errors.”
A well-designed and enabled procurement ecosystem allows the key organisation – as well as its extended stakeholders, to work in a flexible environment without exposing their ERP/MRP systems to unnecessary risk or continuous changes.
“The trick however is to ensure that your SaaS provider or platform is open for integration with other technology providers,” he warns. “This ultimately provides the user with a centralised knowledge centre that keeps the entire supply chain in the loop.”
Through the keyhole
It’s often not the lack of information available throughout the supply chain that is the problem, but rather that the information does not feed to a central knowledge centre.
“Ordering decisions are very often based on historic trends, fluctuations of any sort then result in emergency orders, overtime and overall chaos,” says Neil. “This is like looking at your organisation through a key hole. Only when supply chain information comes together at a central point can data be turned into information that can assist business owners to make decisions based on industry-wide knowledge.”
These integrated analytical tools can assist organisations with tracking how they’re doing in a current period versus a previous one, as well as determine downstream risk by viewing how their suppliers or stakeholders are doing.
The procurement ecosystem should also be designed to provide relevant insights that is made visible only to relevant stakeholders. This promotes full transparency between customer and suppliers, while catering for multiple role players.
“A custom reporting view for all parties involved is not only a huge convenience, but allows for core data to be kept secure. Every business should of course be very concerned about their data security and ensure that the ordering ecosystems they participate in are sufficiently designed to ensure data accuracy, integrity, and security.”
Distributing order information via email might be perceived as the tried and tested way, but it is far less secure than incorporating it into an ordering ecosystem with the latest security and encryption protocols in place.
“Information is one of the most valuable assets of any business, but it shouldn’t be kept in a proverbial safe,” Neil concludes. “Sharing insights in a secure and controlled manner can help supply chains unlock value that is merely a click of a button away.”
VSc Solutions, www.vscsolutions.co.za