For many organisations the supply chain is becoming an increasing area of focus, and this is not just because of the increasing risks posed by more global and complex supply chains, but also due to the opportunities presented.
In recent years there has been increased scrutiny placed upon those organisations whose supply chains contain sub-standard suppliers, producers or factories. Whereas previously issues with working conditions, for example, may have been directed at employers or owners, the new norm is that those at the top of the supply chain should be exerting a more positive influence.
The impact of this shift is being felt across all industries and sectors with new legislation being regularly introduced, placing new compliance demands upon thousands of organisations. This has in turn led to a multitude of new standards being introduced to help organisations demonstrate compliance, and ever expanding global reporting frameworks which cover and promote supply chain reporting.
Irrespective of the drivers for understanding your suppliers, the problems still remain the same. This is often an area that has grown from different areas of the business meaning that, even if you do gather supplier information, you may have multiple systems to do so in multiple departments. For others the main issue may just be that there is little visibility of who all of your suppliers actually are.
Through our experience we have identified some simple steps, which if followed, can help get you well on your journey towards managing your suppliers more effectively for your business.
1. Bring together your organisation, and your suppliers into one place
In order to be able to manage your suppliers effectively, or indeed impact positively upon your supply chain, you need to be able to access all of your suppliers and all of their information, in one place.
This is fairly obvious, but in order to achieve this you will need to have both agreement across your organisation that this the approach to take, and of course on how to take it.
It is likely that this will entail consolidating information into one of the multiple systems already in use, or adopting a new software solution. Secondly, and almost more importantly it will involve reviewing current processes, and creating new ones, around supplier engagement, ongoing supplier management and supply chain reporting.
2. Identify, upload, and segment your suppliers.
Although these three steps will be dependent on the systems you have chosen and the processes put in place, the underlying principles remain the same.
Once you have agreed on how and where to centrally manage suppliers, you need to identify who all of your current suppliers are and ensure their records are located in one system. At this point you should begin to segment your supplier list into meaningful categories to enable easy identification within the system, perhaps by internal buyers.
This is done most commonly through simple categorisation of suppliers into groups, but in time this can be extended to include different ways of labelling suppliers e.g. risk categories related to relevant legislation, or performance levels.
3. Upload contracts and other supplier information.
With all supplier records now centrally managed and accessed in one place, it should be possible to bring in additional supplier information from across the organisation.
One of the key areas for organisations who cannot afford Enterprise contract management solutions, is how to maintain consistent and robust processes for managing their contracts. We would suggest that contracts are the key element of a relationship with a supplier and should provide the basis for any records held for an individual supplier.
Any solution used for supplier management should enable you to hold a database of your supplier contracts, and provide a consistent management approach i.e. through automated notifications in relation to termination and notice period dates.
4. Distribute assessment questionnaires to relevant suppliers.
Now that you have all supplier records in one place and categorised appropriately, you should hopefully be in a better position to identify which suppliers you require further information from.
This request is usually carried out through the distribution of relevant supplier assessment questionnaires. The driver for this could be in to ensure a supplier’s ability to deliver services to you, for example by having the correct certification in place. Or it could be that you require further information from particularly high risk suppliers, perhaps in relation to compliance with the UK Modern Slavery Act.
Ideally the chosen solution should enable you to store this information against all of your supplier records so that it can be accessed across the organisation. If it does not then you should look at ways to ensure that the key information from supplier responses is made available either through integration or internal processes.
5. Automate processes to ensure the solution is scalable.
Those responsible for supplier contracts or supplier relationships will always have additional day to day worries. It is one thing to have a centralised database of suppliers, containing all contract information, supplier assessments and documentation, but users need to be able to efficiently access information at the relevant times.
If you can set up automated notifications on key data then users can be confident that contract renewals negotiations will be timely and key compliance documents such as insurances will not expire.
6. Use analysis tools to access and report supplier information.
As we have discussed, one of the key reasons to understanding your suppliers is to meet legislative requirements. In order to demonstrate compliance you will need to be able to access and report supplier information.
The information required may vary across different supplier categories and labels, and depending on the projects or services you are providing at any particular time. You should ensure that your database of information provides you flexible access to the stored information.
There is no point gathering and storing this information, if you cannot use it for the purposes for which you undertook the project in the first place.