[Editor’s Note: Today’s article is a guest publication from Prokuria. Ardent Partners is happy to review and feature guest publications from authors across the procurement and supply management industry. If you or someone you know would like to become a guest contributor, please contact us at editor at cporising dot com. Thanks!]
Meta description: Supply chain risk is a reality every procurement department has to deal with. E-sourcing acts as the gateway towards a more structured workflow between buyers and suppliers, decreasing overall risk.
The supply chain industry has gone global. Its role in the international marketplace has become more and more relevant and with it so has the role of e-sourcing software as a guardian against increased risk.
E-sourcing is a gateway towards a more structured workflow between buyers and suppliers. By using this software, you’re effectively decreasing overall risk, whether it be financial, confidentiality, operational, reputational, or legal. Think of it as intelligent risk management.
What are supply chain risks? you might be asking. Here are some types of risk that your organization may face:
- Product-related – adulteration, testing, liability, quality, or counterfeit products;
- Logistic problems – shipping, strikes, or equipment breakdowns;
- Environment issues – waste or natural disasters;
- Legal or financial – IP infringement, foreign exchange rates, credit, geopolitical issues, data security, regulatory issues, or poor contract management.
From your own direct suppliers to their own network of suppliers and so on, this chain only increases the risk factor. This development of more complex supply chains has made businesses increasingly reliant on e-sourcing.
Simply put, e-sourcing works by preventing anything from having a negative impact on operations or profitability. But in reality, it’s a little more complex than that. Here’s how e-sourcing can help you manage risky supply chains:
It allows buyers and suppliers to engage in a structured format
Keeping hold of your supply chain is certainly a form of art. The nuances of controlling risk, cost, and quality have also turned it into more of a science. E-sourcing allows you to manage relationships, communications, and collaborations with suppliers within a single online portal. Every step of the sourcing process, integrated within one application. These types of tools have also provided invaluable support in contract management, a particularly vulnerable area when it comes to human error.
By automating the vetting of suppliers
Without a sure fire way of selecting suppliers, you might be tempted to succumb to the temptation of low-risk behavior. This includes implementing an overly-restrictive approval process, an unwillingness to give new suppliers a chance, excessive inventory levels, and an unwillingness to make long-term volume commitments. This excessive compression of the supplier database can lead to awarding a contract to a single-source contractor, which doesn’t take into account one of the most important risks in the business: an impending disaster in the form of financial failure. A balanced supplier portfolio guards against exactly this type of circumstance and is a much better way of ensuring a sustainable supply chain.
E-sourcing gives you the freedom of expanding your supply range. Making sure that suppliers meet your assessment guidelines is easier than ever. By allowing you to evaluate suppliers according to strict assessment criteria, this software lets you focus on improving key supply chain improvement opportunities.
By maintaining clear visibility and trackability of the supply chain
E-sourcing software helps you address events that occur both upstream as well as downstream in the supply chain. In fact, it lets you study patterns and incidents in real time, in order to plan for and proactively address a problem before it becomes one. For those involved in procurement and executive management it should and would be more effective to evaluate the possible impact of potential extreme events, before they occur. By standardizing processes and capturing data on suppliers which can be analyzed to flag issues, e-sourcing helps you be proactive instead of reactive.
E-sourcing allows you to evaluate large quantities of data and present results efficiently
E-sourcing tools have revolutionized the tracking of supplier information. Everything from sell-side responsiveness, pricing to delivery reliability can be structured and compared to create a stronger, healthier supplier chain. It also offers a balanced and considered view of cost and risk by providing real-time data on spending, gathering information from all your sources. You can, therefore, gain valuable insight into metrics such as spend by region, by supplier, spending trends, and other benchmarks.
Risk has always been and always will be a part of supply chain management. There’s no way of completely avoiding it unless you plan on completely eliminating any procurement activities that involve third-party suppliers. E-sourcing provides a way of creating a secure and high-performing supply chain — one in which risk is minimized and supplier relationships can flourish. Make e-sourcing a part of your process and your company can join the ranks of intelligent risk management opportunities.
About Prokuria. Prokuria is a cloud-based platform, headquartered in Bucharest, Romania, that simplifies the procurement process and helps businesses achieve major cost and time savings.
