Manage Material Sourcing Effectively Through Online Cloud-Based Systems

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Globally supply chain managers are constantly faced with the challenge of reducing variability about items procured from vendors. The problem of variability is far higher in the real world and an off-the-shelf ERP software does not provide meaningful support to handle this crisis.

To reduce variability, custom cloud-based vendor qualification systems are developed that break down the sourcing and inspection at site procedure into a series of steps for inbound materials ensuring that they conform to the order specification and are fit for use even before it leaves the vendor’s dock.

Integrating the need for submitting a ‘certificate of analysis’ before the lots are shipped, creates a ‘virtual material quality check’, ensuring that every inbound material has been checked and has met its specifications as ordered by a qualified inspector. The accountability of the ‘virtual material quality check’ is with an inspector who must sign off based on the order specification.

Over time, with the consistency of QA data, the vendor moves up the ladder of trust based on the least variability, enabling stock receipt managers to reduce the number of fit-for-use checks on inventory being received.

The variability most often stems from inconsistent communications between the manufacturer and the vendor and shows up itself as outdated parts, not fit for use material specifications, damaged shipments, incorrect quantity, incorrect safety stocks, mislabelled packaging, missing documentation, or as too late deliveries.

The best means to address vendor variability is to address it at the source, with the vendor. This requires shared systems that communicate the order specification requirements effectively allowing for further communication on the order and collaboration in real-time. A collaborative platform that highlights issues in near real-time will reduce vendor quality issues. Documenting the issues regarding individual vendors creates additional checkpoints for inspectors to double-check in addition to the standard inspection that all loopholes have been fixed before it is deemed fit to ship.

Finally, it’s important to understand the potential benefits of reducing variability. It is probably the best ‘bang for the buck’ when multiple vendors are participants of a single supply chain performance. If the supply side presents an opportunity, and it very often does, the methods mentioned above provide a very strong return on investment.

Additional References

[1].Walter L. Wallace and Yusen L. Xia, Delivering Customer Value through Procurement and Strategic Sourcing: A Professional Guide to Creating A Sustainable Supply Network, 2014