Why Supplier Management is More Critical Than Ever to Global Organisations
Posted by Ian Clemens, BSc, FRSC, founder and Director of i-Clem Consulting Ltd in Supplier Management on August 9, 2016
Your business needs rapid access to key products, raw materials and consumables from your supplier network. Timely acquisition and fulfilment of orders allow your company to function with minimum local stock levels, which reduces the capital outlay required to maintain operations. Developing this level of confidence in your suppliers can take many years, and usually results from evaluating available suppliers based on their ability to deliver on the criteria most relevant for your business environment.
It is not an easy task to whittle down the vast array of supplier options, and your business will have its own criteria to base this assessment on. Some companies procure the same products on a regular basis and may therefore only be interested in a few parameters to assess performance (namely price, delivery time and quality.) Other establishments require a diverse range of items from an equally diverse range of suppliers. Here not only do the supplier management evaluation criteria become more complex, but keeping track of all the data from a vast array of vendors becomes even more challenging. Once the data is collected, having the ability to view it in a meaningful format is critical to making informed decisions on preferred supplier choices.
Let’s review two examples of how having accurate, real-time supplier management data is critical for your business.
What You Need, When You Need It
Some of the most complex supplier scenarios are found in the scientific research environment — particularly chemical research. Scientists are notorious for having diverse procurement behaviours. They want to buy a different product from a different vendor every day. There are often no patterns regarding what they have procured the weeks before or what they will in weeks to come. This simply reflects the dynamic environment in which they operate, and no amount of process analysis would be able to standardise and bring order to their world.
Synthetic research chemists are probably the most extreme case to study. They may buy a reagent, use it once, then never again. A colleague in an adjacent lab may require the same reagent the next day, in a year’s time or maybe never. Each day is different, and their requirements for chemical reagents reflect this variability. Here there is also a necessity to maintain an accurate local inventory of all past procured materials, on the off chance that they might be required by another scientist. Also, this inventory tool needs to allow scientists to view and order new reagents from external sources, not already present in their local lab or store. JAGGAER’s Research Materials Management solution addresses this challenge by allowing a scientist to search, view and request reagents from all internal and external sources, all from a single screen.
Ensuring Supplier Integrity and Performance Across the Globe
The chemist’s supplier network is vast, totalling many thousands globally. Multi-national organisations with research activities at many sites across the globe often find it most challenging to maintain a centrali
sed supplier performance database. For these organisations, elements of performance such as shipping category accuracy become even more important. As shipping regulations become ever more stringent when transporting chemicals internationally, some suppliers falsify the description of the material to “ease” its passage to the requestor. There may be some financial gain, in the form of a reduced shipping cost, or an attempt to bypass a more complex process which would negatively influence the delivery schedule for that item. The requestor may not be concerned about these practices because they received what they needed and completed their work. However, regularly trading with a supplier that engages in fraudulent shipping practices exposes multi-national companies to great financial and reputational risk.
But does this really happen? The answer is yes. In my 30 years in the pharmaceutical industry, I have seen numerous attempts by suppliers to expedite the shipment of a chemical compound by using at best, a little poetic licence, and at worst, a complete and deliberate miss-characterisation of a material to facilitate its timely delivery to the customer. But remember we only know what we know, and how many instances remained undetected, unreported or were just not communicated globally, is another story. This is precisely why having the information necessary to identify and block orders from problematic suppliers is so important.
In summary, the ability to collect, view and act upon supplier data is key on many fronts. In my multi-national pharmaceutical example above, having sophisticated processes to manage the supplier performance and even being able to remove certain vendors known to be engaged in fraudulent activities, would be more than a “nice to have.” This would allow the requisitioner to make an informed decision as to the best supplier for their current needs. In our increasingly global environment, unearthing unscrupulous suppliers, warrants immediate action in preventing others from using their services. The ideal system would also provide the flexibility to examine site-specific local factors as well.
Clearly supplier performance monitoring is vitally important. Our ability to link supplier data to the procurement process, provides the next challenge for software developers.
About the Author: Ian Clemens, BSc, FRSC
Ian is the founder and Director of i-Clem Consulting Ltd. Before establishing his own company, Ian was the Director of Chemical Support Technologies at Novartis. Evolving this role over nine years, his remit covered the areas of analytics, purification, parallel synthesis, scale-up and compound and reagent management. In addition to this role, Ian was also the global lead for reagent supply, where his interest in streamlining the procurement process for scientists began. Prior to this, Ian held the position of Principal Research Scientist at Eli Lilly for five years, leading parallel synthesis and compound and reagent management activities. Before joining Eli Lily, he held a number of positions over 15 years with Glaxo and Glaxo Wellcome where his interest in synthetic and support technologies originated.