By William Crane, CPSM
New is a simple but powerful word. After all, amid the coronavirus (COVID-19) pandemic, there is little within supply chains that is not new. Strategic priorities vary, from sourcing new parts to resourcing and outsourcing existing supply. However, the objective is often the same: Organizations need to quickly identify and qualify new suppliers.
As the environment rapidly evolves, so too must supply bases. Supply management leaders from such industries as automotive, construction and recreational equipment are rethinking traditional supply management strategy input variables to build supply chain agility. Many are starting to execute some level of supply base optimization strategy. Further, organizations are striving to better quantify risk by sourcing value through total cost of ownership instead of lowest piece price.
Software is also reshaping sourcing timeline expectations: E-sourcing tools are shortening quote-to-award cycles, while newer technologies such as artificial intelligence (AI) compress big data insights throughout the process. However, the difficult question of which suppliers to put on sourcing bid lists can be a process bottleneck. It can be especially challenging for complex engineered products, like assemblies, which involve many critical supplier capability inputs. Still, intelligent supplier-search software is gaining traction as a purpose-built productivity tool for reducing the drag of identifying and qualifying potential suppliers for global sourcing.
Aligning Strategy and Mission
As they strive to eliminate future supply disruptions and mitigate risk, supply management leaders need to seek alternative suppliers, whether from other countries, regions or closer proximity, or multiple suppliers for a product. One strategy for determining those suppliers is to align your sourcing strategy to support your mission, and then identify suppliers that empower you to realize your strategy and mission. For example, an automotive Tier-1 supplier of premium interiors could align its supply base within the same region as its customer’s final assembly plant to enable greater vehicle customization supply agility.
“We have been working with our current supply base to understand the best place to manufacture. In some cases, it has been the U.S.; in other cases, it might be countries that we haven’t been sourcing from, like Vietnam or Taiwan,” says Bridget Martin, senior manager — strategic sourcing at Rockwell Automation, Inc., a Milwaukee, Wisconsin-based industrial automation and information technology manufacturer.
Greg Toornman, vice president — global materials, logistics and demand planning at Duluth, Georgia-based agricultural equipment manufacturer AGCO Corporation, says, “Having dual sources across the globe was a big benefit in our ability to deliver the same level of supply performance pre, during and most likely post COVID-19 pandemic.”
Supply management leaders who detail their sourcing strategy plan before identifying potential suppliers realize more success. Sourcing strategies most commonly being deployed today are:
•Localizing: Moving supply to suppliers closer to final product manufacturing
•Onshoring: Transitioning supply from international to domestic suppliers
•Offshoring: Transitioning supply from domestic to international suppliers
•Diversifying: Spreading supply across regions, countries and/or suppliers
•Consolidating: Decreasing supply across regions, countries and/or suppliers
•Expanding: Increasing supply across regions, countries and/or suppliers.
Supplier Search Software Productivity Tools
Supply management teams have traditionally worked independently to comb the internet and databases to identify potential suppliers that meet industry, technical and preference requirements. Teams then meet to discuss potential suppliers, their qualifications and add them to bid lists. This approach works but is slow and requires in-person meetings, and knowledge is often lost in the process.
As a result, tools that allow virtual teams to store, share and collaborate in real time — as well as enable organizations to quickly adjust — are critical. One example: agile supply chain tools that improve productivity while allowing for greater flexibility.
The standard software solution of rigid process automation to enable productivity can fall short if organizations need to change direction. Intelligent supplier search software that incorporates agile supply chain methodologies is gaining favor by blending productivity with flexibility to better empower professionals to identify suppliers in less time.
Here are 10 intelligent supplier search software features, and how to get more out of them to compress your efforts.
1) Accelerate with agile project management. Global sourcing is typically a large initiative that involves many cross-functional team members, with information exchange required throughout the process. Agile supply chain project management software to track project, team and individual tasks can increase organization and shorten time lines.
2) Strengthen with shared supplier intelligence foundation. As team members transition responsibilities, too much time can be wasted on discovering and rediscovering suppliers. Digitizing existing supplier information into one common software home empowers your team with a stronger collective supplier knowledge base to build upon.
3) Improve with ideal supplier requirements. Outline — and prioritize — your must-have and nice-to-have supplier capabilities before searching. Often, strategic requirements that align with your company’s mission, like increasing diversity spend, are not included in initial searches, which leads to suboptimal results.
4) Quicken with intelligent supplier search. Cloud-based intelligent supplier search software allows you to filter searches based on specific requirements. These advanced search tools often contain vetted existing supplier data and supplier recommendations that improve (through machine-learning algorithms) the more you search.
5) Customize with editable supplier databases. Newer software technologies enable users to add data — processes and suppliers — to existing data sets; this allows your supplier data to reside in one place. Customizable databases allow teams to overlay specific industry and company preferences to better qualify suppliers.
6) Compress with collaborative supplier lists. During dynamic market environments, meeting supply needs often requires rapid sourcing. Multiple team members can now view, edit and track supplier statuses, which enables greater real-time collaboration and faster process speed.
7) Visualize with tracked supplier interactions. Supplier-relationship management tools empower teams to document critical supplier capability and technical data in a common location, limiting redundancies and confusion.
8) Automate with plan for every part. Complex engineered products require a holistic sourcing approach. Thus, the ability to instantaneously organize suppliers into an automated plan for every part — to form indented bills of material, with automated delivery times, inventory levels and packaging requirements — can prove invaluable for global-sourcing decisions.
9) Connect with APIs for end-to-end digital process. Advanced programing interfaces (APIs) allow purpose-built software tools to be easily and quickly added into an existing ERP system. You can be up and running with intelligent supplier-search tools as a stand-alone product in an afternoon. Or, you can choose to integrate systems for a seamless end-to-end digital process.
10) Accelerate with supplier qualification services. As organizations experience workload spikes, it may be best to engage a services partner to consolidate, clean, digitize and enhance existing supplier data to free up time. Select software companies offer virtual supplier identification and qualification support that can be delivered to you by experienced industry experts, though their cloud software.
Proactive Supplier Intelligence
A company’s production should stop when identifying an alternative supplier. The above strategies and new intelligent supplier search software productivity tools can prove valuable in compressing the time to locate new suppliers. Moving existing supply should be a last resort, but during times of rapid change, organizations must be prepared to act swiftly.
Forward-thinking supply management leaders are starting to use intelligent supplier search software to identify and qualify additional backup suppliers. Simply having this market-intelligence data improves company resiliency. However, this concept can be taken a step further through the monitoring of a wider range of current and potential suppliers as part of a broader, ongoing agile supply chain risk management effort. A robust supply base can empower organizations to thrive in a more dynamic world.
Leaders must continuously refine supply management strategy to adjust with the environment and align with suppliers to help further the company’s mission. Software productivity tools can accelerate new supplier searches, so organizations can align with the right partners now and into the future.
William Crane, CPSM, is founder and CEO of IndustryStar, an Ann Arbor, Michigan-based on-demand services and software technology company that partners with business leaders to reduce the cost, time and risk of bringing new products to market.