Manufacturers in today’s economy are beset by constant challenges, and for many, those start in the first mile. Buyers must work closely with suppliers to process orders and shepherd them from the moment the purchase order (PO) is cut, to the moment the shipment arrives on the loading dock. In between, there are numerous steps that must be executed and monitored by both the buyer and supplier.
But working closely together on PO management is often a struggle in and of itself. Buyers must meet suppliers where they are, meaning they must use whatever system suppliers have in place. For most organizations, email is the default method, and that can quickly become a nightmare. Emails can be missed or delayed. If a particular supplier is on vacation or leaves the company, other team members likely won’t be able to jump into the missing person’s system and work efficiently.
And that’s not to mention human error. Did the emails get mixed up? Has all the data been entered (accurately) into the ERP at the appropriate time? How long ago was the PO sent? Did the supplier send an acknowledgment? Searching for all this information is time consuming, costly, and bogs down buyers in a mountain of clerical work just to get their basic daily work completed.
Successful modern supply chains are moving beyond these old ways and embracing new synergistic approaches that deliver all the benefits of supplier collaboration with far fewer headaches, far better data accuracy, and far greater profitability.
Understanding the Benefits of Supplier Collaboration
Improved Supply Chain Visibility:
- Collaboration allows for better visibility into the entire supply chain, including real-time data on inventory levels, production schedules, and demand forecasts. This visibility helps in making informed decisions and responding quickly to disruptions.
Cost Reduction and Cost Sharing:
- Volume Discounts: Collaborative purchasing allows companies to consolidate their orders and negotiate better volume-based discounts with suppliers.
- Economies of Scale: Combining resources for transportation, warehousing, and logistics can lead to cost savings due to economies of scale.
- Shared Investments: Companies can jointly invest in research and development, tooling, or infrastructure, reducing the financial burden on individual parties.
Demand Forecasting and Inventory Optimization:
- Demand Visibility: Sharing demand forecasts and production plans enables suppliers to align their production schedules more accurately with customer needs.
- Reduced Stockouts: Accurate demand forecasting reduces the risk of stockouts or overstocking, leading to improved customer service and lower carrying costs.
- Lean Inventory: Collaboration often promotes lean inventory practices, minimizing waste and holding costs.
- Continuous Improvement: Collaborative relationships foster a culture of continuous improvement, with suppliers actively engaged in identifying and addressing quality issues.
- Quality Metrics: Companies can establish key quality metrics and performance indicators, allowing both parties to monitor and improve product quality over time.
Joint Product Development:
- Early Supplier Involvement: Suppliers can contribute their expertise during the design phase, leading to designs that are easier to manufacture, more cost-effective, and of higher quality.
- Faster Prototyping: Collaborative relationships often result in faster prototyping and testing, reducing product development cycles.
- Risk Assessment: Companies and suppliers can jointly assess potential risks in the supply chain, ranging from natural disasters to geopolitical instability.
- Contingency Planning: Collaborative partnerships enable the development of robust contingency plans to mitigate the impact of disruptions.
Speed to Market:
- Rapid Feedback: One of the benefits of supplier collaboration is that it allows for rapid feedback loops, enabling quick adjustments and improvements to products or processes.
- Parallel Workstreams: Companies and suppliers can work on different aspects of a project in parallel, compressing development timelines.
Customization and Flexibility:
- Tailored Solutions: Collaborative suppliers can adapt their offerings to meet specific product requirements or customization requests, enhancing the company’s competitive edge.
- Quick Response: Flexible suppliers can respond rapidly to changes in order quantities or specifications. This is one of the critical benefits of supplier collaboration.
- Eco-friendly Materials: Collaborative efforts can identify and source environmentally friendly materials, supporting sustainability initiatives.
- Supply Chain Sustainability: Companies and suppliers can collaborate on reducing the carbon footprint of the supply chain through optimized transportation and energy-efficient practices.
- Shared Resources: Collaborative partnerships can involve sharing specialized equipment, knowledge, or human resources, reducing costs and improving capabilities.
- Shared Technology: Joint investments in technology can lead to shared benefits and increased competitiveness.
Better Communication and Trust:
- Open Dialogue: Collaborative relationships promote open and honest communication, allowing both parties to address issues proactively.
- Trust Building: Trust is a cornerstone of collaboration, and it develops over time as companies and suppliers consistently deliver on commitments.
- Stability: Long-term collaborations provide a stable foundation for both companies and suppliers, reducing the risk of sudden supply chain disruptions.
- Shared Growth: As both parties invest in the relationship, they can mutually benefit from each other’s success and growth opportunities.
SourceDay’s Unified Supplier Collaboration
It’s important to understand the benefits of supplier collaboration; it’s equally important to understand how to achieve it. SourceDay is a supplier collaboration solution that consolidates every PO into one solution, allowing buyers to manage multiple suppliers and thousands of orders without leaving the solution.
SourceDay allows management by exception, sending notifications about orders that need attention. Reducing workload, reducing lead time, and fostering supply chain visibility are all benefits of supplier collaboration that SourceDay delivers.
And SourceDay makes it possible for suppliers to keep their current workflows if they choose. If email is their preference, they can continue using it with only a single-click onboarding. SourceDay works with that. If they use EDI, SourceDay integrates with it. And if a supplier wants to adopt the SourceDay solution and take advantage of all the true benefits of supplier collaboration, it’s available to them.
In this way, SourceDay makes it seamless for buyers and suppliers to come together and work strategically to manage orders, solve challenges, and find new ways to improve performance and profitability.
ERP data accuracy is a constant challenge for many manufacturers, and it impedes the collaborative relationship with their suppliers. SourceDay writes all data directly to the system—no matter which ERP your company uses. Buyers, suppliers, and leaders all have access to 100% accurate data, delivering true supply chain visibility—one of the critical benefits of supplier collaboration.
Only SourceDay provides a single solution to manage every PO across dozens of suppliers—with no supplier adoption required. SourceDay makes it possible for buyers and suppliers to work closely together with no delays, inaccuracies, or long nights and weekends chasing emails or spreadsheets. This is how manufacturers develop strategic partnerships that are profitable and deliver the key benefits of supplier collaboration.
Ready to learn more about how SourceDay can revolutionize your PO management processes? Get in touch with us here and we’ll show you everything we mean.