As Head of Business Development and Strategic Alliances, I see the evolution of procurement and logistics every day. These days, procurement and logistics processes are not as simple as getting goods from A to B – and even less so on an international scale. My next few blog posts will focus on ten key procurement and logistics trends that are shaping international business today, and how you can navigate their pitfalls.
The first trend I will cover relates to more accurate demand planning from end-user organisations and supply chain service providers.
Today’s supply chain management is about understanding and manipulating an easily overwhelming set of variables to achieve a deceivingly simple result: delivering on-time and within budget. Central to this is a requirement that underpins all current trends in the industry: understanding the product.
Even in this day and age, organisations often manually manage their own inventory using spreadsheets, which can result in inaccurate ordering and forecasting. Inaccurate ordering leads to the delivery of incorrect quantities or products, a situation which can have critical impact, especially under project deadlines. This situation is further exacerbated with cross border ordering, leading to uncertainty around cost of return, cost of re-order, time for re-delivery and additional customs expenses. Incorrect demand planning therefore results in inaccurate or unplanned deliveries, incorrect orders, costly stockouts, spending more money on emergency shipments and ultimately, very dissatisfied management.
It is critical for organisations to plan properly and keep varying lead times in mind. On the flip side, careful demand planning on the part of vendors and your supply chain services provider also plays a crucial role, because how well these organisation manage demand planning impacts directly on your business. If vendors and supply chain service providers don’t plan properly, their clients bear the burden. Lead times of four to six weeks suddenly stretch to an unacceptable ten to fourteen, or longer. Delays in shipping and customs clearance could mean that your project implementation and go-live dates are also delayed.
So how do you avoid these problems? It’s important to communicate openly with your supply chain service providers and integration partners. These organisations have extensive visibility across the entire supply chain and can add value and insight during early stages of your project, ensuring proper demand planning.
Strong demand planning and product knowledge on the part of your supply chain service provider will result in better and more consistent results. By choosing the right supply chain service provider, you can say goodbye to spreadsheets; your provider should have a web based eProcurement portal which enables you to quote, order and purchase products and services, track your inventory, invoice and pay – all with a few clicks.
Ask yourself the following questions when you next look at your demand plan:
- What is on-time delivery worth to your organisation?
- How could real-time access to your proof of delivery and bills of entry help you?
- And if you could get this information on a central portal – what value would that have for you?
- Would reports of due deliveries enable you to plan better?
- And could better planning have significant gains for you?
- Would you find it of value to receive pre-delivery notification of your orders?
- How could this resolve potential storage constraints?
- How important is it to you to have a partner that could facilitate your special delivery requirements or needs?
Once you have asked yourself these questions, talk to your supply chain service provider to find out if they offer you what you really need to ensure accurate demand planning, including easy ordering and delivery processes.
Look out for my next blog post where I will be talking about globalisation and how it is dramatically influencing the way business is managed and transacted today.