CASE STUDY

Understanding the Role of a Dependable Partner: Supplier Identification in the Logistics Industry

Jul 19, 2021

What is Supplier Identification and Its Role in the Logistics Industry?

The role and importance of the logistics industry has become exponentially more crucial and evident as urbanization, convenience, and doorstep delivery continue to become the norm. As logistics companies prepare for the post-COVID era, they are entering a completely new and highly evolved market, and require new perspectives toward strategizing, ideation, and execution. Developing and maintaining strong relationships is a crucial contributor and supporter to this effort for businesses, and companies must utilize tools such as supplier identification, supplier relationship management, and contract lifecycle management to improve their partnerships significantly. Starting business relationships on the right terms, drafting robust contracts, and developing mutually beneficial partnerships requires a comprehensive understanding of the potential partner, external factors impacting relationships, market developments, and various industry risks. With supplier identification, companies can enter their new partnerships with transparency, clearly defined terms, and sustainable strategies based on well-defined expectations and objectives. Additionally, this process can substantially improve the nature, quality, and sustainability of business partnerships.

How can Supplier Identification Improve Relationships the Logistics Industry?

Improve Negotiations: Choosing the right partner, determining the ideal terms, and setting accurate expectations is a challenging task that often demands in-depth research, a comprehensive understanding of the market, and a data-driven approach to developing sustainable partnerships. Supplier identification provides companies with insights into the companies’ market, suppliers’ market, and dynamic impact of various factors on current and potential business decisions. Subsequently, this enables data-driven decision-making, and provides companies with the information and power to develop mutually beneficial and fair terms for their contract, overcome the impact of rapid market developments, and begin partnerships with on a robust foundation.

Mitigate Risk: All business operations, functions, and processes are wrought with various major risks, which may cause various challenges including monetary losses, decline in market share, reduced profitability, and long-term challenges that impact the business. As the logistics industry grows, companies face various potential risks regarding transportation, storage, hygiene, and safety of their products, making the need for a reliable partner more evident than before. Supplier identification helps companies find potential risks within the market, research methods and approaches to minimize or mitigate them, and identify partners that make the risk assessment and mitigation process easier, more accessible, and sustainable.

Better Transparency: Creating and maintaining a cohesive, transparent, honest, and resilient supply chain requires significant effort, strategizing, and planning, and a comprehensive understanding of the value and importance of clarity, data, and transparency within an organization. While developing partnerships, companies must attempt to ensure honesty and transparency from both parties to enable a trust-worthy, sustainable, and reliable relationship. Supplier identification requires companies to clearly understand and stipulate their needs, expectations, targets, and business goals, which enables an honest exchange and understanding from the first step onwards, and helps potential suppliers in gaining insights into the company and reciprocating the transparency offered.

Choose Suitable Partners: As companies expand and the industry grows, choosing the right partner has become more crucial and influential, and companies are investing significantly in utilizing reliable tools, processes, and strategies to find and partner with the right suppliers. In the logistics industry, best-fit suppliers can substantially reduce costs, improve profitability, enable sustainable growth, increase market share, and promote expansion. The supplier identification process is primarily dedicated to finding, evaluating, and developing partnerships with the right suppliers, while propelling growth, profitability, and long-term success. By leveraging this process companies can minimize the risks of dishonest partnerships, establish transparency, and promote long-term relationships that help maintain a lead in the competitive market.

Increases Quality: A robust partnership, clear insight into a suppliers’ operations and ethics, and well-defined sourcing strategy can lead to high-quality products and services, and enable high customer satisfaction in the logistics industry. Maintaining and ensuring a certain level of quality, meeting the industry standard, and staying ahead of the curve is highly essential in a growing and competitive industry, and having a reliable partner makes that process significantly easier. Supplier identification helps companies understand the industry standard, assess and compare different suppliers’ offerings, and choose the partner best suited to their business. This helps maintain consistency, aim for and reach a specified target, and develop other long-term benefits.

Success Story

As the post-COVID era becomes the focal point of attention for companies across industries, companies in the logistics industry are facing various challenges including a significant surge in demand, the need for reliable partnerships, and increasingly difficult competition. With a rise in omnichannel sales, the growth of eCommerce and online platforms, and demand for doorstep delivery, logistics companies are facing the need to meet high demand while maintaining quality, consistency, and reliability, and maintaining industry standards. A renowned logistics company based in Europe identified various shortcomings in current partnerships as they prepared to enter the post-COVID era, and chose to collaborate with SpendEdge to leverage supplier identification and develop stronger business relationships. To assist the company, our experts closely assessed the supplier identification, relationship management, negotiation, and compliance management processes in place, and identified a severe lack of organization, clarity, and real-time data. Therefore, the experts worked closely with the procurement team and developed a comprehensive set of guidelines and strategies to identify potential partners, negotiate contract terms, develop a transparent and reliable contract, and overcome inefficiency, market risks, or industry developments. With this advice, the European logistics company prepared for the new era, spearheaded change and innovation within the industry, and developed long-term partnerships to assist in future challenges and crises.

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