Having a diverse supplier network can make a profound impact on an organization’s ability to mitigate and respond to risks in its supply chain. Multiple supplier partners mean there’s competition for your business, an incentive to innovate on product offerings, and motivation to offer you competitive pricing. In our previous blog in this series, we discussed how some variables impacting supply chain performance are outside our control. Over the last few years, we’ve seen just how true that is. This realization has had a catalyzing effect on our industry, and moving away from single-supplier scenarios in favor of sourcing multiple vendors for every product has become common.
It’s not always possible, but organizations should find out where their supplier network can be diversified and where it cannot. Today’s geopolitical atmosphere is unpredictable, and there may be certain regions of the world that can’t be relied upon to produce goods and products the way they have in the past. For example, electronics manufacturers rely on materials that are often sourced from specific regions around the world, like cobalt or gallium, both of which primarily originate in a very limited number of areas. Another example is reliance on specific ports. In the US, dock workers staged a three-day strike that, even though short-lived, had enormous ramifications for shipping on the East Coast. In these situations, finding suppliers that are physically closer to you could reduce reliance on external factors and buffer against risks. But it’s not easy to find new suppliers. For some critical resources, like rare earth materials, there may not be an alternative source.
Investing in Technology Can Boost Supplier Network Diversification and Performance
Technology can offer an assist in this area. Automation can eliminate manual, time-consuming tasks so procurement pros have time to identify and vet alternative suppliers. It can also simplify and speed up the process of vetting and integrating new suppliers. This helps companies diversify their supplier network more quickly without the bottlenecks traditionally associated with manual onboarding. Digital collaboration can improve communication with existing and potential suppliers, fostering better relationships and helping companies identify diverse suppliers to meet their long-term needs.
SourceDay is a direct procurement risk management platform powered by the industry’s most comprehensive dataset, derived from more than 97,000 suppliers, 100 million annual PO updates, almost $60 billion in direct materials spending, and more than 75 million messages to and from suppliers. Armed with this intelligence, our customers can apply effective strategies and regularly increase efficiency by as much as 80% in critical buyer/supplier collaboration during PO lifecycle management.
Real-time access to key performance metrics, including on-time delivery rates, quality metrics, and responsiveness, makes it possible to know at all times how suppliers are performing or where improvement is needed. And because all purchasing data is centralized in one location and every change is tracked and visible to both parties, everyone has the opportunity to be proactive in identifying and improving performance.
Proactive Supplier Engagement
Our strategy for supplier engagement is crucial to our mission. In our experience, engagement is directly tied to performance—the stronger the connection, the better the results, leading to a more resilient and dependable supply chain.
The best outcomes happen when buyers and suppliers work together toward mutually advantageous goals. We’ve tackled supplier engagement within the SourceDay platform in two key areas. First, we’ve revamped the supplier dashboard to ensure it’s always intuitive, showing exactly what steps must be taken next. Second, we’ve developed an email-based workflow that allows suppliers to review purchase orders and suggest changes without needing to log in. Since launching SourceDay Supplier Engagement in January, we’ve seen engagement levels rise from 58% to 75%, while on-time delivery (OTD) improved from 54% to 94%.
This collaborative approach has made the process effortlessly simple for suppliers and enabled our clients to set clear expectations and hold suppliers accountable.
