Supply Chain Collaboration: Why Supply Chain Managers & Procurement Should Collaborate
Take a moment to think about your business model. What to goal do you hope to accomplish, and how are you planning to serve your customers? Is your facility manufacturing products, or do you run a warehouse that relies on vendors for inventory? These questions might seem easy to answer, but unless your factory and warehouse are on the same premises, you must work with suppliers and other supply chain partners to be successful. In fact, nearly 70 percent of overhead costs derived from procurement and logistics operations, so supply chain managers need to lower these costs, reports Adam Robinson of Cerasis. In the growing world of e-commerce and omnichannel supply chain strategies, supply chain collaboration is tantamount to running a business successfully, and supply chain managers and procurement professionals must collaborate for these reasons:
Supply Chain Collaboration Improves Product Flow.
Demand determines the success of suppliers. This includes suppliers of both finished products and raw materials. Suppliers are responsible for bringing products to your facility, and your facility relies on the availability of products around the clock. When a consumer makes a purchase, it subtracts from your inventory, and timely replenishment is critical to future orders. In essence, supply chain managers who work with vendors can streamline product flow.
It Boosts Customer Satisfaction.
Customers want to know a product is available when they want it. If the product is not available, consumers are more likely to move on to your competitors. In addition, sending customers the wrong product will only breed hostility and could cost the customer’s loyalty. Supply chain collaboration ensures product availability and order accuracy, which improves customer service.
Collaboration Increases End-To-End Visibility.
Tracking inventory and assets is crucial to supply chain management, and to meet increasing demand in the digital supply chain, managers need to know which products are available from vendors. In other words, supply chain the managers need to know what vendors have available and vice versa. This increases visibility across the whole supply chain.
It Increases Supplier-Supply Chain Relationships and Builds Trust.
Partnerships throughout the supply chain also improve relationships among procurement, warehouse, transportation, and customer service departments. Through continued communication and working together, better relationships lead to higher trust and lower product costs. Long-term partnerships continue to lower costs as they age, reports Matthew Myers of Supply Chain Management Review.
Collaboration Promotes Competitive Advantage.
Even niche markets have competitors, and supply chain managers need to establish strategic partnerships throughout their supply chains. Since the goal of every supply chain is to get products to customers, supply chain collaboration builds competitive advantage by reinforcing and catering to the needs of your customer base. Ultimately, supply chain managers and procurement both have a duty to work together to fulfill their business models.