How to better collaborate with your Suppliers and enhance your Supply Chain

Imagine that your company has all those IOTs devices at the warehouses and factories, advanced planning systems and all the state of the art means of production, but doesn’t have a reliable system to interact and collaborate with their Suppliers?

Many companies adopt the Contract Manufacturing model (also named Subcontracting) where theirs Suppliers are responsible to build their products and send to them the finished products. Other companies receive from Suppliers some raw material and send them to other more specialized Suppliers to finish the products needed. 

More specifically, contract manufacturing is an outsourcing of certain production activities that were previously performed by the manufacturer to a third-party. A company may outsource the manufacture of certain components for the product or outsource the assembly of the product.

The Boeing aviation company use this subcontracting model to receive parts from the 787. Their supplier network includes wings manufactured in Japan by Mitsubishi and flown to Seattle for final assembly in a specially-modified 747 cargo aircraft; whole fuselage sections manufactured by Alenia in Italy, Fuji in Japan, and Spirit in Kansas, and delivered to the Boeing Seattle plant; and engines built by General Electric in Ohio.

Those are common business cases today and after the globalization those operations can take place at different locations and parts of the world.

At those scenarios it is very important to have the most updated information about the stock and lead time of the Supplier, keep tracking of the transacted documents between Buyer and Supplier (such as Subcontracting Purchasing Orders, Order Confirmations with correct Delivery Dates, Advanced Shipment Notices, Good Receipts of Finished Products, etc.).  It is also very import also to keep track of the Components Shipments from Buyer to Supplier and the Components Consumption Reports from Supplier to Buyer. 

On the other side, the Supplier needs to know from Buyer what is their Production Plan, when they will need the components, how many quantities will be produced, etc.  Sometimes the Supplier needs to exchange messages to solve doubts with the Buyer in the context of a Purchase Order for example.

The process to register your Suppliers also needs to be standardized and your company must have information on how the Suppliers are performing their duties. The Suppliers needed to be trained to use all those new tools and interfaces.

Using SAP and SAP Ariba solutions your company can easily achieve the benefits from the Intelligent Supply Chain and standardize all those information flows.

As we can see in few lines above, visibility, transparent information and standard flows are vital for the success of the Supply Chain Collaboration between Buyers and Suppliers. 

See you in the next post !!!