Tag Archives: manufacturing

Procurement Technology – What It Can And Can’t Replace In A Manufacturer’s Journey Towards Supply Chain Resilience And Agility

A review of the key elements in supplier management for manufacturers and how Source-to-Pay procurement technology can support the journey towards supply chain resilience and agility in times of crisis.


As the COVID-19 pandemic disrupts global supply chains, procurement organizations around the world are scrambling to react. There are many supply chain management lessons to learn from the Covid-19 crisis.  However, some organizations are better prepared to weather this storm than others. Many of these organizations are already using Source-to-Pay technology and are now realizing more than ever that technology is a “must have” to ensure their supply chain remains resilient and agile throughout a crisis. In this article we’ll review how supplier management capabilities in Source-to-Pay technology can free-up and enable a manufacturer’s direct material procurement team to do what they do best to ensure the supply chain remains resilient and agile: be creative and strategic.

Supplier Data Quality & Management in Decision Making

It may be the most basic level, but data management may also be the most daunting for some organizations. Supplier Data is at the core of every procurement activity, and it is critical for those dealing with direct materials in manufacturing. Often, what procurement teams end up with are multiple collections of data stored in tiny, disconnected data silos, such as: spreadsheets, MS Access databases, email and even the dreaded manila file folder and sticky note.

Obviously, these methods of capturing and recording data have limitations, and these limitations can hamper decision making in several ways, and ultimately impact the management and resilience of the organizations supply chain. Some of these challenges include limited:

  • Ability to collaborate, identify opportunities or issues and act
  • Transparency, or ability to scale data, across an organization
  • Ability to enrich data sets with other, related data sets.

These challenges in the direct material supply chain pose a real threat, especially in a time of crisis and let’s face it, there is no shortage of events that could jeopardise and/or disrupt a business, potentially impacting their profitability, business continuity, image, and reputation. Often, organizations try to band-aid the data problem, which can cause long term problems and inefficiencies long into the future. This is where Source-to-Pay systems can help – by providing procurement teams with a system that centralizes information and ensures data quality meets a high standard. This in turn enables procurement teams to better evaluate a situation, make decisions and act.

Managing a complex network of direct material suppliers

Manufacturing supply chains are notoriously complex, and this fact has been a common topic of the news media throughout the COVID-19 pandemic. It’s a manufacturing organizations’ procurement team that is on the front lines fighting for the supply chain’s survival. However, procurement teams often lack consistent visibility beyond their tier 1 strategic suppliers for each product line, and this limits a company’s ability to ensure the materials and processes required to produce a product are consistently available.

It’s not uncommon for direct materials procurement teams to capture information on sub-tier 1 suppliers. However, organizing and making sense of this data is so challenging that it is uncommon for all but the most critical product elements in the most mature procurement organizations. This is where Source-to-Pay (S2P) technology can help, by enabling procurement teams to capture important information across the entire supply chain so they can identify potential issues early, initiate collaboration with the necessary parties and take action to support suppliers and mitigate potential issues.

Risk & Performance Management

The evaluation of direct material suppliers is often nuanced and complex depending on the final product, regulatory concerns, and other requirements. However, it is up to the procurement team to find a way to ensure that suppliers:

  • Are not risky;
  • Perform well over time;
  • Meet quality & regulatory requirements;
  • Maintains the right certifications, and more; and
  • Meet Corporate Social Responsibility (CSR) expectations.

Empowered with all this information, procurement teams can ensure supply chain continuity and resiliency, and that value is maximized for the company. But it just isn’t possible to achieve the levels of organization and collaboration necessary to collect all the data from suppliers, 3rd party data providers and internal business processes to give buyers a complete picture of each supplier across the supply chain without a serious database and supporting processes. To get started and keep the process more manageable, many companies focus on a smaller subset of key suppliers.

Source-to-Pay technology can help procurement teams establish and organize campaigns to collect & update supplier information and receive real-time supplier risk management updates on important risk factors (e.g. Financial, etc.). Furthermore, these solutions can help procurement collect feedback from stakeholders, track and maintain certifications and more. With this information, procurement can rapidly identify and classify issues and then collaboratively work with suppliers on improvement plans.

Developing Suppliers: Establishing & Implementing Supplier Strategies

One of the benefits that effective supplier development programs have in common is they establish mutually beneficial partnerships between the supplier and buying company. These programs enable bilateral feedback, opportunities for product and service innovation, access to new markets and investment. The key to the success of these strategies begins with communication and transparency, both of which are also essential in times of crisis. Additionally, manufacturers with mature supplier development strategies in place tend to have:

  • Access to reliable data,
  • The ability to identify critical suppliers across all tiers of the supply chain,
  • Capabilities to monitor and manage supplier risk and performance,
  • The ability to closely collaborate with the supplier, often including commercial, operational and technical strategies and plans.

Accomplishing and maintaining each of these elements over time is often a challenge for all but the most mature procurement organizations, but it is never too soon to lay the foundation. Source-to-Pay technology can help procurement lay the foundation, by fostering communication, collaboration and better visibility across the global supply chain. 

Supply Chain Resilience and Agility

Due to the COVID-19 pandemic, the world is now painfully aware that even the best run supply chains can encounter significant challenges. However, some supply chains will recover faster than others because of their resilience and agility. What the best performing supply chains most likely have in common is a procurement organization with a strong data foundation to support effective decision making, the ability to collaborate and communicate with and support all tiers of their supply chain, monitor and track risk and performance and effective supplier management and development strategies that has produced close partnerships.

Throughout each of the elements described in this article, Source-to-Pay technology replaces much of the manual, non-strategic effort necessary to support and manage supplier relationships. The result is a foundation that empowers procurement teams to add more value to the organization and be better prepared to manage their supply chain through times of crisis.

Will Mexico Overtake China As The World’s Biggest Manufacturer?

Will Mexico soon overtake China as the world’s largest manufacturer of goods? Find out here.

With supply chains the world over now disrupted and many of us now scrambling to find a plan b, c and beyond in order to produce or procure goods, there hasn’t been much room for asking ourselves the big questions. But with life in China now quickly returning to normal, and some European countries already planning to lift restrictions, it’s time we did. If our supply chains can be broken so easily, so quickly, should we continue to trust China with almost all of our manufacturing? But if we move, where should we move? 

Many experts believe that China’s dominance is so well-established that moving elsewhere is simply infeasible. Yet others disagree, and Mexico is quickly becoming a favoured location for plan b – or potentially plan a – manufacturing for a number of reasons. Forbes even went as far as to say that Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer.

Given the monopoly China has had on our manufacturing to date, it’s sometimes hard to imagine an alternative. But many experts believe we have to, and now is the time to do just that. So when the crisis fades, will we all continue manufacturing in China as we’ve always done, or will we be forced, or will we want to, explore what a better alternative might look like?

Mexico has free trade

Ever since their manufacturing boom started nearly four decades ago, China has had various versions of near free-trade agreements with most countries. But in the US at least, that all changed when Trump became president in 2018. Trump, who had long accused China of unfair trading practices, promptly placed tariffs on more than USD $360 billion worth of Chinese goods, with the aim of encouraging Americans to buy local. China retaliated, and many US goods were also heavily taxed. 

Although the two countries are in continued negotiations and some tariffs have been removed, the US and China are far from reverting to anything close to a free-trade agreement. This, from America’s perspective at least, makes Mexico a very attractive prospect for manufacturing. Owing to the existence of NAFTA (the North American Free Trade Agreement), goods manufactured in Mexico don’t attract a tariff if imported. 

But Mexico’s advantage is broader than just with the US, says Diego De La Garza, Senior Director Global Services and Delivery, Corcentric. He believes that Mexico has an advantage not just with the US, but with the world:

To finish reading this article, join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news via the group. You’ll also have the support of thousands of your procurement peers, world-wide. 

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Big Ideas Summit 2016: Big Idea #8 – Manufacturing’s Next Generation

Paul Markillie believes a change of image is necessary for manufacturing in order to attract the next generation of talent.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

The Next Generation

Paul Markillie, Innovation Editor at the Economist, shares his big idea to change the out-dated, and incorrect, image of manufacturing to attract the next generation of professionals into it.

Paul believes that one way to get new professionals interested in manufacturing-related jobs, such as procurement and supply chain, is to add it to the school curriculum. This gives students access to modern design software to make them aware of the possibilities in manufacturing as a career.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

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