The effective operation of your supply chain is vital to your company’s growth. But achieving supply chain excellence is getting more difficult. Globalization, outsourcing, pricing pressures, new technology, and quickly-changing market conditions all increase complexity. And that can create barriers to achieving visibility across your source-to-contract processes for direct materials. Indeed, according to Chainlink Research 65% of buyers have poor visibility into their supply sources.
With poor visibility into supply availability increasing the risk of stock outs and missed shipments, many companies make the costly decision to raise their safety stock levels. In addition, businesses are often hit with inflated costs as a result of contract leakage. This occurs when terms agreed during initial contract negotiations with suppliers are not properly communicated and adhered to, resulting in less favorable terms for the buyer.
Breaking down barriers to collaboration
So, how can you increase much-needed visibility across your supply chain? The answer is by improving collaboration. By better connecting people both inside and outside your organization you can make supply chain planning and execution more effective and reduce the time required to get your products to market. However, many barriers stand in your way.
Collaboration across multiple teams – both internal and outsourced – is very difficult to achieve in an effective way. A reliance on manual processing, or a multitude of poorly-integrated, standalone solutions, make information sharing problematic. In fact, more than 60% of the enterprises surveyed by The Economist are not using collaboration to its full potential.
Giving direct procurement a digital transformation
But what if you could collaborate with all of your suppliers on a single digital network across all processes? Imagine if you could reduce direct materials contract leakage while increasing visibility into your supply chain.
Network-based supply chain collaboration tools can open the door to a new world of possibilities by enabling companies to collaborate in real time while running direct source-to-contract processes on a single digital platform. These solutions can also integrate with back-end enterprise software, such as enterprise resource planning (ERP) and product lifecycle management (PLM) applications, to support a procurement approach that tightly connects people, information, and processes.
Establishing a single portal for supply chain collaboration
Leading international crane manufacturer The Manitowoc Company has made supply chain collaboration a priority. In a recent Webinar on “Real-time Supply Chain Collaboration: A Single Network, All Suppliers, Total Process Integration” [webinar replay], hosted by Supply & Demand Chain Executive with participation by SAP Ariba, the Wisconsin-based company shared its success story.
With a global direct spend of US$1.15 billion, Manitowoc embarked on a supply chain transformation journey in 2007. The company was looking for strong direct materials functionality to support ongoing lean manufacturing efforts. It also wanted to create a single portal for all its supply chain collaboration needs. As part of the project, the company eliminated three homegrown supplier portals, significantly reducing development and maintenance costs.
Transforming source-to-contract processes
Ten years on, Manitowoc is reaping the benefits of providing a single face to the company’s suppliers. The company is able to share information and collaborate with suppliers in real time on the management of processes, ranging from order confirmation to shipment notifications right through to invoice processing. By running all the processes on a single, unified platform that integrates with existing back-end systems, Manitowoc has increased workflow automation, streamlined processes, and improved efficiency.
Suppliers benefit from early insights into upcoming demand for their products. In turn, planning staff at Manitowoc gain clear visibility into availability of the materials they require. In this way, both supplier and buyer work together in a more agile manner to meet the needs of a dynamic market.
Embarking on a change management journey
For Manitowoc, it is clear that implementing new technology was only part of the story. For the project to succeed, the company had to invest considerable time and resources in changing the way it approached procurement. By working together with SAP Ariba as a design partner on the software company’s supply chain collaboration offering, Manitowoc was able to benefit from lessons learned and evolve the solution to better fit its needs.
Key to success was an internal champion whose task it was to rally the business and IT teams around a common vision. Meanwhile, the opportunity to review processes enabled Manitowoc to challenge the way business is done, identifying new ways of running simpler and more efficiently.
This article first appeared on The Digitalist