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Our work with companies in a number of sectors has shown that for high performing purchasing organizations, supplier management is the single most powerful lever in reducing costs and improving performance across an extended value chain.
- Strategy No. 1: Inventory and Capacity Buffers
- Strategy No. 2: Manufacturing Network Diversification
- Strategy No. 3: Multisourcing
- Strategy No. 4: Nearshoring
- Strategy No. 5: Platform, Product Or Plant Harmonization
- Strategy No. 6: Ecosystem Partnerships
Buffer capacity is the most straightforward way to enhance resilience, whether in the form of underutilized production facilities or inventory in excess of safety stock requirements. The challenge is that buffers are expensive, and supply chain leaders may have a hard time justifying them to the C-suite. Learn more: Supply Chain Planning — Your Str...
In response to the U.S.-China trade war, many companies have begun to diversify their sourcing or manufacturing bases. For some, this has meant switching to new suppliers outside China, or asking existing partners to supply them from elsewhere in Asia or in countries such as Mexico. Learn more: Supply Chain Scenario Planning “Disruptions to supply ...
In 2011, major natural disasters in Japan and Thailand disrupted supply chains across the world and exposed companies’ reliance on single sources of supply. In the automotive industry, nearly finished cars could not be shipped to customers because of missing, and often inexpensive, components. Multisourcing is an obvious way to mitigate this risk. ...
Beyond multisourcing, some companies want to reduce geographic dependence in their global networks and shorten cycle times for finished products. Regional or local supply chains can be more expensive, because they add more players and complexity to the ecosystem, but they allow for more control over inventory and move the product closer to the end ...
The more regionalized the network, the more harmonized plant technology has to be to allow products to move seamlessly across the network. The use of common vehicle platforms for a variety of models in the automotive industry is one well-established example of such harmonization. Standardizing components across multiple products — particularly thos...
The COVID-19 crisis has shown the need to have a diversified approach to sourcing. At the same time, however, collaboration with strategic raw material suppliers and external service partners is also vital to ensure better preparedness and resilience for the future. For companies without the scale to support multiple locations on their own, strong ...
Jul 7, 2020 · Closer relationships between buyers and suppliers could create significant value and help supply chains become more resilient. New research sheds light on the ingredients for success.
- Evaluate, collect data and build a strategy. The first step starts with embarking on a disciplined and organized evaluation of your sourcing needs. This consists of the following processes
- Determine the right engagement model. A key element of developing your strategy lies in selecting appropriate sourcing events, such as an eAuction or a detailed RFQ.
- Research and award your supplier. In researching suppliers for potential awards, be sure to evaluate the following
- Contract implementation. You’ll need to work with your new supplier to devise a communication plan to implement the new goods you’ve selected for your business.
A 2023 survey found that a third of businesses are using artificial intelligence (AI) to improve resource and supply chain planning, and more than a third said using digital tools for inventory management was the most effective strategy in cutting overall supply chain costs.
Dec 3, 2020 · Supply chain management: Value chain analysis provides insights into how each component of the supply chain adds value to the final product or service, which can lead to better supplier coordination and logistics management.
People also ask
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Why is visibility important in supply chain management?
1. Visibility: End to end. Visibility is needed to effectively manage your supply chain. For example, if you have a clearer understanding of what is coming from your suppliers, including those beyond tier one, you can proactively plan deliveries, including notifying warehouse operations in advance.
