Supplier Management: An Important Piece of Your Digital Transformation Puzzle

One of the things that makes supply chain management so complex and challenging is that there are so many dimensions to it. One of those dimensions is inbound logistics and supplier management, which often doesn’t get as much attention as the outbound side. What are the main challenges companies face with supplier management and the inbound side of their supply chain? How can technology help? Those are the main questions I discussed with David Vannoy, VP of Sales at ProcessWeaver (now part of Elemica), during a recent episode of Talking Logistics.   

Supplier Management Challenges 

I began our discussion by asking David what challenges companies face with supplier management and inbound logistics. David notes that while companies regularly focus on the outbound side, they have difficulty with visibility to inbound logistics and supplier compliance. “Since companies often accrue about 40% of their transportation spend on the inbound side, they are leaving a lot of money on the table,” he says.

David states that a big challenge is that many large companies, especially retailers, have a hard time tracking supplier adherence to routing guides, ASN labeling standards, and other inbound requirements. There are also problems with suppliers fraudulently using their account numbers for things like expedited shipping not authorized in the purchase order.

Many companies don’t have automation or APIs to track and evaluate supplier performance and they don’t have visibility to what’s arriving at their facilities on any given day. As a result, planning is difficult, which leads to inefficiencies. “And with all of the changes since the pandemic, visibility to inbound is even more critical today, especially with the trend toward smaller warehouses closer to the customer to compete with Amazon,” he says.

How Technology Helps

I asked David how technology can help with these inbound challenges. David explains that, “Software platforms automate and enforce the routing guides for suppliers so they don’t have to make those decisions. Software platforms also make sure suppliers have the ASN label specifications and don’t have to buy separate software for that. So, it adds a lot of value for the suppliers while enforcing your routing guides and standards.”

David adds that there is so much paperwork with transportation, particularly when dealing with international shipments, that it’s almost impossible to ensure supplier compliance if you’re trying to do it over the phone or with emails. “These platforms allow you to take control of your supplier community and provide the visibility you need to manage your business,” he says. 

David also comments that if you are using suppliers to drop-ship, the platform provides visibility to delivery events for revenue recognition and financial settlement. It also has all of the information customer service needs to answer customers’ questions about their shipments.

A Real World Example

I asked David to share an example of how this technology has helped one of their customers. He mentioned a large aerospace customer who was having trouble with fraudulent use of their carrier account numbers. They had no visibility or control over what service level of shipping was being used until the invoice came in for the shipment.

The company spent about 18 months onboarding approximately 5,500 suppliers. “Fortunately, they were a big enough company to compel suppliers to use the platform,” David comments. “The company wanted its POs fulfilled correctly and they wanted visibility to KPIs to reduce its transportation spend. Previously, they had a large staff to attempt to track this information down.”

Besides compliance, the company wanted to collaborate with its suppliers to improve operations. The platform enabled this collaboration and provided a direct feed of shipment information into their ERP system. This allowed for competitive rate analysis and consolidation possibilities before the shipment got on the truck.

“In the first year they had a $1 million ROI, and that was just on shipment service level savings,” says David. “That didn’t include expected savings from reduced headcount and people working more efficiently.”

Getting Started

What questions should companies ask themselves to assess whether they’re a leader or laggard with regards to supplier management? How can they get started moving up the technology maturity curve? David shared some great insights and advice on these questions and more, so I recommend that you watch the full episode for all the details. Then post a comment and share your perspective to keep the conversation going.