“Technology like in other areas, is a boon to procurement services as well,” says Manish “ At Sodexo, we have this excellent example of how technology integration with CRM can ensure speed, accuracy and transparency is supply chain management with its West Bengal Clinical Technology Management project. An innovative mobile application-based data collection enables the company to collect structured data from field and label them using barcoding system for each of the assets. Important parameters are collected, and images of the assets are clicked for verification purpose at any point in time. With the implementation of this process, our field staff has to simply click the picture of the spares needed and use the barcoded asset details to place an order from any of the 1400 medical facilities in West Bengal. The recipient at the store, seeing the tagged asset, has exact details on which equipment, the spare needed and is therefore able to initiate the order delivery process seamlessly. Nearly 1,00,000 biomedical equipment in government setups are managed this way by Sodexo team members. The process has improved services and the order to delivery cycle has shown an improvement from earlier estimated 30 days to over a week now.”
Sathish states that digital technologies will enable a stronger procurement capability in years to come and this process will ultimately create an enhanced data platform to support the procurement requisites. “The future of procurement technology professionals is increasingly mandated to select suppliers that add greater value to their supply chains. The idea is to leverage and integrate the intellectual property of their supplier base above and beyond current arrangements.”
“The data analytics helps in understanding the minimum requirement level and helps enable the just in time supply so that the inventory level is kept at its minimum”, says Keith. “The smart buying will trigger WO/ PO’s only when required & as per seasonal needs. Also, the trends will ensure that based on the material usage FIFO is done.
The digital platform will ensure that services are enabled based on the requirement which are constantly changing with respect to the workplace & the technology deployed in the IoT equipment.
Optimal supplier analysis is found to be a key element in procurement
With the rising number of suppliers and vendors contributing to the business, it is becoming a challenging task to manage them. Though outsourcing brings in several benefits, in terms of filling the skill-gap and keeping a check on costs, often the larger number of external suppliers brings in business risks. To cope up with this, Aval suggests that companies should try to keep the number of vendors to the minimum. It is good to incur some extra costs and hire an agency which can provide diversified services and manage some more suppliers under it, instead of engaging different suppliers for each and every activity separately. “This is quite possible with the advent of technology solutions wherein one can engage with an online platform that enlists verified suppliers and can avail of services at any point in time.”
“In a strategic sourcing, supplier analysis plays a vital role by digging deep in a supplier while running discovery phase. It helps get insight about supplier not limited to operational capability, financial strength, category strength, scalability, etc.” adds Amit.
In Sathish’s opinion, supplier evaluation criteria and the key factors in conducting a successful supplier and vendor evaluation is largely founded on data and is one of the key factors for a successful vendor selection criteria. Assessment of a potential supplier’s capability of controlling quality, delivery, quantity, price and all other factors to be embodied in a contract.
Keith agrees that optimal supplier analysis is required to keep a constant watch on the quality of products being supplied along with the service & delivery schedules being adhered to. Purchasers keep looking at existing & new suppliers to ensure that they get the best deals of product quality, supply & price which are now all available through global portals & e-bizz.
Strategizing supply chain
Although procurement and supply chain are closely related to each other, they are not one and the same. These are the two disciplines which are interdependent on each other, and when they achieve the right level of collaboration, it works wonders for an organization.
However, in order to achieve that perfect level of collaboration, both the functions have to address the core activities that must work in tandem in order to keep the processes going at optimum levels. Very often, supply chain professionals are now wellversed with the procurement systems and processes within their companies and the same goes with procurement teams who are not aware of supply chain dynamics. That’s where the conflict arises.
When both these functions do not understand each other’s strengths and weaknesses, it translates soon into problems. Both these functions need to develop a sound understanding regarding their processes, especially related to these core areas:
• Demand analysis, including forecast
• Inventory management
• Product/Service life cycle management
• Supplier management
• Risk management
• Capacity building
There may be more areas for businesses depending on caseto- case basis. Although when the above areas, which are inherent to procurement and supply chain functions, are focused upon in terms of collaboration, the results are astonishingly different.
“This covers a variety of other components such as negotiations, contract management, financing, efficiencies of cost and scale, among others. Deploying technological tools could play an instrumental role in making the interplay between procurement and supply chain functions much more productive. Technologies such as Electronic Data Interchange (EDI) and Automated Data Collection (ADC), for instance, are the ones which organizations must consider sooner than later,” explains Aval.
Amit endorses that Property Management can benefit widely from supply chain management by leveraging strategic sourcing, supplier & spend consolidation, deploy technology platform, logistics management, risk management, contract management framework etc. All this will help yield significant value ranging from 3% to 25% depending upon maturity of sourcing function in organization.
“It is very important for businesses to ensure two things for their supply chain to be focussed. In other words, supply chain management is a network of those businesses that are with all the latest information about the various aspects of its production. There are Eight Components of Supply chain Management,” explains Sathish: These are Planning, Information, Source, Inventory, Production, Location, Transportation and Return of Goods.
Keith also stresses that supply chain is vital as a major product differentiator for both product quality and the shortest time for delivery of products. This ensures that the delivery is at the most economical mode and at the shortest time with a return of defective products which could impact the bottom line of the business.
“The movement of the goods is the key in today’s market so that warehousing & distribution centres ensure the least damage & loss. The biggest area of concern is the loss prevention which could be the difference between a good profit or loss.”
As procurement is getting transformed, there can be skill gaps
In order to achieve enhanced capabilities and improved efficiency, companies spend millions of dollars into transformation programs, software and third-party services. These goals include globally adaptable supply chains, regulatory compliance, mergers and acquisitions outcomes and stewardship of products and brands.
In fact, they are not only top-performing procurement functions but are evolving into service providers for the business. They aid in aligning with other enterprise areas in savings, sourcing and risk management efforts and help to enable capabilities with them. They help the procurement function to manage commodity volatility, source-to-pay integration and control the broader risk of systematic performance tracking.
In all of this, the individuals who make it happen are either mentioned as just a part of a team, unit or function without a name and a face. The focus is only on executive buy-in without consideration for the individuals who perform these roles with proficiency.
