Author: Tronserve admin
Friday 30th July 2021 07:28 PM
Managing Global Risk as Trade Policies Fluctuate
Purchasing is central to most business processes, so software applications that can address the whole purchasing value chain and calculate tightly with additional major areas of a business are a real business asset. Such software can reduce non-value-added work, provide real-time insights and enable a company to receive greater operational agility in relationships with suppliers. Here’s a look at Supplier Relationship Management (SRM) and the role it plays in helping companies master purchasing in a progressively complex and volatile global market.
Think of having a customer relationship management (CRM) application to simplify and record high-frequency and complex interactions with your suppliers and have all that communication connected to appropriate supplier quotations and agreements throughout your business. This will be exactly what enterprise resource planning (ERP) with an embedded SRM solution can deliver.
Smoother Supplier Interactions – SRM in Focus
A good SRM solution would have the potential to allow users to track supplier interactions, including formal RFI/RFQ processes that result in Supplier Agreements or Purchase Orders. It will address requisitions to order through shipping monitoring and goods arrival, managing both direct and indirect materials — including support for authorizations. Users can then use supplier schedules to facilitate forecasts and call-offs in repetitive environments.
React to Trade Policy Change & Cooperate With Supply Chain Partners
Manufacturers gradually operate on a global stage and must be able to modify to quick changes in trade policy, which could restrict supply and increase landed cost. An SRM solution can better prepare you for this by bringing purchasing, the supplier and the end customer together into a single view. Using an SRM solution, businesses can decide to lock in longer-term pricing agreements with suppliers in regions potentially affected by protectionist trade policy.
It could be possible to collaborate with your supply chain partners to divide up the issues caused by tariffs or non-tariff barriers. This then helps you address key buying questions such as: Is the vendor going to absorb that added cost, or is it going to be passed on to the customer or divided up among the supplier, your company and your customer? Because all the necessary information can be captured by ERP with embedded SRM, this helps the landed cost of the item to be determined, placed into inventory value and then, after reviewing basic cost realities, a determination can be made on what action will be taken.
A Holistic, Controlled Approach
A comprehensive SRM approach gives companies the quick information they need to negotiate with and make better judgements about vendors, which is essential in a swiftly changing global trade environment. It is also a good fit for multisite companies operating globally.
This type of software has amazing advantages for the supply chain team, including permitting them manage by exception. In an ideal solution, they can configure the system to let most purchases go forward with less interventions, but they may opt to subject certain purchases to greater analysis. This includes those without a default supplier, purchases above a certain dollar threshold, purchases that align with special projects or other cost centers that may have their own policies or processes, and any purchases that are not for the acquisition of production raw materials.
Business processes are often split between different people in the business, for regulatory and risk management purposes, and good SRM software will help businesses to avoid a single person from creating a supplier record, accepting a purchase order to them and then receiving the product. These preventive integrity controls can be automated using data on each user’s role and permissions. This segregation of duties also may help companies doing business globally conform to many jurisdictions’ compliance frameworks including Sarbanes-Oxley and security best practices.
Part Management for Better Decision-Making
Part information by supplier can also be maintained to enable for better decision-making. For instance, a part may be expedited by picking out a various shipping method. Or the same part may be obtained from a different supplier for a faster lead time and at a lower charge but with the added hassle of performing inspections internally. This dovetails with materials requirement planning (MRP) and arranging for required lead times. It should accommodate complex purchasing and scheduling functions including scheduling by part and supplier, supplier splits, project-or progress-based billing, and costing via landed cost. But in a global environment, the ability to recognize part information by supplier might help a manufacturer mitigate emerging risks among suppliers that may come under sanction, or those located in potentially politically or economically unstable regions of the world.
Purchasing – an Operational Requirement
More than almost any other business discipline, purchasing is interwoven with the fabric of the business. What that means is your SRM solution should be part of a tight, enterprise-wide ERP suite that permits purchasing and supply chain professionals to drive more value for their associates around the company and around the world. It must automate and streamline much of the administrative overhead associated with purchasing, but it also can be a powerful tool in assuring compliant and minimal risk purchasing on a global scale — especially at a time of growing volatility.
This article is originally posted on manufacturing.net