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Real-time communication is a necessity in a world marked with uncertainties. With changing customer circumstances, natural disasters and other supply chain disruptions, it becomes crucial to see and respond to updates as they happen. Unfortunately, many businesses still struggle to adapt to slowdowns and bottlenecks in a timely manner, often losing out on thousands, or even hundreds of thousands of dollars.
Current solutions for improving communication in the supply chain process still have many limitations that in most cases, businesses have just learned about. The drawbacks here are email lacks security unless businesses have added on these features. Additionally, emails lack the necessary structure to make finding information simple when disputes arise. Emails get lost, attachments may only be sent to a fraction of the relevant participants or multiple threads may be created about the same topic, further confusing information. Therefore, when it comes time to collect this information, users are often faced with many manual processes.
Another example of outdated technology is EDI, which has likely resulted in large sunk costs. While EDI offers more structure than email, it requires a more extensive set of point-to-point connections through firewalls which add to the complexity of the system and use non-standard protocols, limiting its universality.
As systems become more complex, with multiple solutions, vendors, functional service centers and applications, businesses must consider the potential impact a single communication problem may have on their operations. Whether this is a lost email documenting a change in order information, or the lack of compatibility between buyer and supplier systems, even the smallest problems may have a ripple effect on the rest of the organization.
Here are five reasons why prioritizing communication in the coming year will help your team achieve your targeted savings, and how mid-market and small enterprises like yours can improve communication in supply chain with a rapidly deployed portal solution.
1. Supplier Networks are Becoming More Complex
Every year supplier networks are becoming larger with the addition of more backup suppliers. This fact can be attributed to increasing uncertainty in the marketplace, the need to adapt quickly, and the impact of innovation on new suppliers providing products that have never existed before. As a result, even a purchasing organization’s top tier of suppliers is becoming more complex, making it difficult for teams to come together in an effective and efficient manner. Without addressing complexity, it can be difficult to pinpoint disruptions in the procurement process and convey timely information including if a delivery needs to be expedited or reach a different warehouse due to a supply chain disruption. For purchasing organizations, a method for easy communication ensures teams are working together in the pursuit of the same goals.
2. Poor Communication Leads to Missed Deliveries
Following the sourcing process, operational procurement presents some of the biggest concerns in modern procurement processes. During this stage, businesses often need to address late or lost deliveries and general concerns around order fulfillment. Furthermore, businesses are constantly trying to find the right balance of safety stock and managing supplier contracts that protect them if an unforeseen circumstance arises and one of their orders can't be fulfilled, situations that are especially common in just-in-time inventory, supplier-managed inventory and consignment use cases.
The costs of a delivery being late or providing inadequate supplies may cost businesses hundreds of thousands, if not millions, of dollars. Additionally, if staff are having to reallocate their time to address last-minute concerns, overall productivity will be impacted, costing businesses in more ways than one. With improved communication, businesses can ensure they and their suppliers are on the same page and any issues raised are being solved and addressed immediately, from anywhere.
3. Improving the Chain of Communication Makes Governance and Auditability Easier
When businesses support their teams with solutions that provide an auditable communication trail, errors can be easily caught; necessary context is readily available in transactions, and risks can be mitigated for future engagements. Unfortunately, many businesses still rely on email as their system of record. Although this method is real-time, it is also a form of communication that does little to bridge details received by the person on the thread and the one overseeing transaction execution. Therefore, real-time communication becomes essential in responding to issues as they arise; while simultaneously ensuring that the necessary context is provided in "real-time" to those engaging in the transaction.
4. Transparency Supports Relationship Development
As discussed in a previous post about responding to the market with agility, we touch on the value of developing effective supplier relationships, and how maintaining them can help your team address last-minute spot quotes and aid in working towards mutual business goals. However, building these relationships from the ground up starts with trust, a key to creating any relationship. Trust is difficult to gain (especially at the beginning); therefore, businesses are encouraged to remain as transparent as possible, with open lines for communication. This indicates that you (the purchasing organization) are putting trust in your suppliers, and they, in turn, can put trust in you.
5. Joint Support for Long Term Goals
When buyers and suppliers communicate effectively, they can begin working as a "single unit," a position that many executives see as a path toward achieving their procurement goals. When teams work together jointly to support long-term goals, parties are more likely to offer each other flexibility in their engagements. For example, this may include adding additional supplies at a prenegotiated cost to cover spot quotes or accelerating delivery to meet unexpected demand operating under the mentality of "joint" benefit (if the buyer succeeds, so does the supplier).
The Vendor Portal: Solution Analysis
It’s true the gold-standard for supply chain communication is a network, which we recognize is only a possibility for large enterprises who have the budget for these more extensive solutions. Looking at mid-tier solutions that address these concerns without breaking the bank, businesses are encouraged to look to a portal. By leveraging an interface that collects all relevant data, surfaces relevant information on each of a business’ tier 1 suppliers, and allows for real-time communication through the provisions of an inbox, mid-size and smaller organizations can reap the benefits of and enterprise-grade solution without the enterprise price tag.
A portal is a favorable solution for inexpensive, secure, organized and structured communications that leverage standard protocols for mobile or desk web or app access. Combining information, allows users to gain access to all relevant data and improve communication in their supply chain. With all the details of an engagement collected in one place, the whole context and information can be delivered to operating teams when they need it.
Enabling Your Team for Better Communication
Although there is ample room for error with a lack of communication, the opposite is also true. With good communication, businesses can operate procurement processes more efficiently, meeting all targets and achieving long-term business objectives. Rather than suggest your team work harder to communicate, our recommendation is to support them in working smarter.
ConvergentIS aims to help companies that are looking to take advantage of the benefits of a vendor portal quickly, with a (near) instant solution. As the concept of a portal suggests, the ConvergentIS solutions provides teams with a single point of contact for rich real-time communication in the supply chain, with an affordable, out-of-the-box offering that can be deployed in a matter of weeks. We believe that the most complicated challenge businesses face is structuring data for easy use and organizing it in a way that helps teams achieve efficient operations. This is why a large part of our process comes down to learning how your team works and tailoring the solution with the right apps, fields and capabilities to do so.
To learn more about the ConvergentIS solution and how to improve communication in your supply chain, check out our full product overview.