Tag: supplier selection

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4 Effective Steps to Successful Supplier Selection

Selecting suppliers is one of the most critical aspects of any organization. Any inaccuracy in the supplier selection process can lead to poor supplier performance, supply disruptions, and inefficiencies in the business process. However, not many organizations adopt a well-defined vendor selection process and, therefore, struggle when it comes to reducing excess spend.

The inability to leverage effective solutions for supplier selection results in common supplier failures that can be defined in two categories, i.e., quality failures and failures of timing. Quality failures may influence costs to the buying firms; whereas, failures of timings come in the form of late deliveries, back orders, variable lead times, and incorrect shipments. It may include production shutdowns, late deliveries to customers, and increased inventories. In any scenario, supplier failures add to the additionl costs for the buying organization and impact their performance.

Why is selecting a supplier so important?

Any buying organizations’ performance is directly influenced by their supplier’s performance. When suppliers fail to deliver, the supply chain performance of the business starts dwindling and they start looking out for ways to identify an alternative supplier. Conversely, changing suppliers too often can also negatively impact the price and quality of products and lead to stability issues.

At SpendEdge, we understand the impact that an efficient supplier selection process can have on the financial performance of the business. And to help businesses overcome such issues, we have listed some basic steps that can help improve your supplier selection process substantially.

Want to decrease additional costs arising from supplier failures? Talk to our experts and know how adopting an effective supplier selection procedure can reduce the probability of such situations.

Four critical steps to improve supplier selection

Step 1: Identify suppliers

Though identifying suitable suppliers is the key objective of any supplier selection process, business still need to be clear about their expectations from a supplier. By taking into account factors such as suppliers delivery commitments, customer service, reliability and responsiveness, and business policies, companies can better plan their supplier selection process. However, the priority of all these factors may differ according to the requirements of the organizations, and businesses should, therefore, determine the vendor selection criteria and then select a supplier accordingly. Companies can even start the process of supplier selection by analyzing the current suppliers of the organization.

Step 2: Determine supply performance

After selecting a suitable supplier, companies need to ensure that the supplier of choice does not suffer from significant compliance issues since it can impact the productivity of the organization. To do so, they should have an effective vendor selection process in place and conduct audits throughout multiple stages of the supplier selection process. Also, conducting audits beforehand will enable companies to determine the supplier’s strengths and weaknesses before the relationship becomes official.

Want to know how you can select suitable suppliers?

 

Know what your ideal supplier selection criteria should be and how can you enhance your supplier selection methods.

Step 3: Analyze financial factors

In recent times, financial analysis has become one of the most crucial steps in the vendor selection process. It helps companies to analyze overall supply base risk factors and choose suppliers on the basis of their financial strength and competitive advantage. Companies can even call for bids to gather information on the suppliers, the extent of their need, and the reasons why they are the best option for the organization.

Step 4: Create a contract

Creating a contract is perhaps one of the most crucial steps in any supplier selection process. Companies should use this as an opportunity to negotiate with top suppliers while keeping other suppliers on the list of potentials. After the agreement is reached, a contract can be created and signed. In many cases, the purchase order is considered a contract, but companies can even have a contract and then create a purchase order, depending upon the complexity of the situation.

Want to proactively define criteria for supplier selection?  Request a FREE demo below and know how our experts can help you enhance supplier selection.

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Six Effective Ways to Build Better Supplier Relationship Management

What is supplier management process? 

Most organization rely on third-party vendors or suppliers for the purchase of goods and services. Therefore, how an organization engages, manages, and communicates with their suppliers and builds supplier relationships is critical to their overall success. Supplier relationship management refers to the process systematic assessment of the suppliers’ assets and capabilities in view of the organizations overall business strategy. This determines activities to engage in with different suppliers, and planning and executing of all interactions with suppliers to maximize the value realized through those interactions. Supplier relationship management seeks to develop a two-way, mutually beneficial relationships with the strategic supply partners of a company. Supplier relationship management helps build better supplier relationships and thereby achieve greater levels of innovation and competitive advantage than could be achieved by operating independently or through a traditional, transactional purchasing arrangement.

Supplier management strategy and solutions for business

The strategic approach to supplier relationship management has always been critical for businesses that rely on third-party suppliers. For businesses that strive to succeed in the market, having trusted relationships with dedicated suppliers should be one of the primary goals. In this blog post, we are going to take a closer look at some of the key supplier relationship management strategy that will help you improve relationships with suppliers and streamline your supplier relationship management framework:

Suppliers are not just vendors

For a smooth supplier relationship management, businesses must consider their suppliers as their partners. This partnership should be based not only on financial transactions but also on mutual trust and loyalty between both parties. Suppliers should be made to feel like they are a part of the business. They must be informed about your processes, such as product launch and promotions. It is also essential to listen to their concerns or grievances. 

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Best Practices to Ensure Top Notch Supplier Quality

Manufacturing a product isn’t the same as it was about ten years ago, and it will continue to evolve. Today’s fast-paced business world is advancing to such an extent that business leaders must choose to consistently adjust to new emerging strategies to be at the top of the competition. Consumer packaged goods (CPG) manufacturers are under intense pressure to deliver quality products while keeping costs down. The push to globalize to meet customer demand, coupled with increasing mergers and acquisitions, makes it almost impossible for CPG companies to cost-effectively manage the quality of ingredients and materials across the supply chain. Supplier quality management (SQM) is a critical activity that relies on suppliers in the provision of the goods or services. It involves managing, monitoring, and responding to the changes in the supplier’s ability to fulfill customer’s needs on time and to meet the agreed quality specifications. Here are some best practices that will help CPG companies to streamlinSE_Demo2e their supply quality management better:

#Supplier quality check 1: Measure and track cost

If a product quality issue arises, it is often the parent company who bears the cost of poor quality, even though the fault may lie with a supplier. These costs can consume a significant portion of revenue, yet many companies fail to measure and track them in a consistent manner. This results in companies shelling out a bomb on poor quality every year, without knowing where or how to recover these costs. Companies must find out how much it costs to manufacture a good quality product. An appropriate ‘cost of poor quality’ metrics can also help to calculate supplier charge-backs accurately, and recover expenses faster.

#Supplier quality check 2: Set up a  cost recovery system

Agreeing on a cost recovery process with the suppliers can boost accountability throughout the supply chain. It may allow CPG companies to recover the cost of poor quality from a supplier with much more ease, and encourage them to look at and address issues that are causing poor quality quickly and efficiently.

#Supplier quality check 3: Supplier audit

Supplier audit is one of the key factors that will aid in ensuring supplier quality of CPG companies. Businesses can come to a consensus with suppliers on a procedure for a quality check against non-conformances in manufacturing, quality, service provision, compliance, etc. Audits will help companies identify areas for improvement and help ontake corrective actions, response and resolution processes, and targets. It will ensure that the supplier quality meets the desired standards.

#Supplier quality check 4: Build supplier relationships

Tracking supplier quality is not just about avoiding costly recalls, penalties, and lawsuits. It also aims at generating significant value for the business by strengthening overall product quality, enhancing the company’s reputation and credibility, lowering costs, and driving superior business performance. Companies must treat the suppliers as an extension of their enterprise and not a separate entity. Quality standards, audits, and other processes must be enforced with the same rigor and commitment in the supply chain as in the rest of the organization.


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SpendEdge’s Supplier Profiling Helps a Renowned Cosmetic Products Manufacturer Improve their Service Efficiency

Overview of the Cosmetic Products Industry

The cosmetic products manufacturing space is highly dynamic with the extensive use of innovation to meet the growing demand for luxury and prestige produce lines among the audiences. Companies in the consumer packaged goods industry are facing the need to reformulate their product offerings and introduce active ingredients to meet the needs of the health-conscious consumers. Increasing per capita income and growing awareness about beautification are the factors that are sustaining the growth of the cosmetic products manufacturing industry. In addition, the growth of the cosmetic products industry can also be attributed to the radical shift toward organic products.

Although the changing lifestyles and varying climate changes contribute to the growth of the cosmetic products manufacturing sector, some of the factors that may hinder the growth of the industry include.

  • Keeping up with the evolving beauty standards: The competition in the cosmetic products industry is relatively high with the influx of both multinational and regional players. Homegrown players need to design brand-building strategies to respond to the frequent changes in the outlook of the customers. As the consciousness among the consumers increases, brands should keep innovating to stay relevant and address the growing needs of the populace.
  • Innovations: With the drawbacks associated with the use of certain chemical compounds in the manufacturing of cosmetic products, prominent companies in the CPG industry are focusing on innovations to develop herbal and natural beauty products. The rising need for more organic products also involves high investments in research and development.
  • Regulatory challenges: At present, cosmetic products are subjected to stringent regulations from the Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labeling Act. The stringent government regulations are compelling major companies to eradicate issues pertaining to misbranding and adulteration.

In this challenging environment, companies in the CPG industry should ensure that they provide transparency and traceability in their supply chain process and mitigate any risk pertaining to supply chain efficiency. Organizations can leverage the use of effective supply management solution to profile the most suitable suppliers and reduce risks associated with production delays and ensure consistency in their product offerings.request free proposal

The Business Challenge and the Solution Offered

A renowned cosmetic products manufacturer wanted to understand the latest industry trends and identify the key suppliers in the cosmetic products manufacturing space. The cosmetic products manufacturer wanted to keep track of the supplier performance and understand the strengths and weaknesses of their suppliers. With the help of a supply management solution, the cosmetic products manufacturer wanted to profile the most suitable suppliers from a pool of suppliers and engage with the right suppliers to reduce the time-to-market for the products.

To identify the pricing models and improve their operational efficiency, the procurement experts at SpendEdge carried out extensive research across prominent stakeholders in the CPG industry. The procurement experts also compiled information across a wide array of secondary sources such as trade shows, industry forums, and company presentations to assess the performance of the suppliers.

The supply management solution offered by SpendEdge helped the cosmetic products manufacturer understand the latest trends and profile the most suitable suppliers to reduce procurement costs and excess inventory costs. The cosmetic products manufacturer was able to maintain a customer-focused business to deliver product and service optimization and ensure the desired quality to the customers. The supply management solution also assisted the client in mitigating production delays and increasing the time-to-market for the products.

Fundamental questions answered in this supplier profiling solution include:

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The Results

The supply management solution offered by SpendEdge helped the cosmetic products manufacturer identify the most promising suppliers to minimize leakage and maverick spend. The client in the CPG industry was able to efficiently manage their supplier database and segment suppliers based on criticality.

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Supplier Profiling Assists a Renowned Automotive Electronics Manufacturer Increase their Supply Chain Efficiently by 25%

Overview of the Automotive Electronics Industry

In the recent years, the automotive electronics space is witnessing a promising growth, owing to the shifting consumer preferences toward vehicles with safety equipment. The rising demand for map-supported front lighting, collision warning, and speed alert is fueling the adoption of automotive electronics components. With the relative advances in technology, renowned manufacturers in the automotive electronics space are focusing on innovations to reduce costs and stay ahead in the competition. Moreover, the increase in consumer spending on entertainment systems including satellite radios, MP3 players, and rear set entertainment systems is anticipated to enhance the growth of the automotive electronics space.

Here are some of the factors influencing the growth of the industry:

  • Strict safety norms: In the recent years, the automotive electronics space is witnessing stringent regulations in terms of the quality of their products offered. With the growing regulations on safety, organizations are compelled to invest heavily in application areas to increase the overall efficiency and reduce the impact and likelihood of accidents.
  • Increase in consumer spending: With the recent economic recovery, the consumers’ spending has increased, and they are shifting their preferences toward vehicles considering the safety aspects in it. In addition, the governments’ initiatives such as rebates on car loans are further compelling consumers to increase their spending on automobiles.

To address such challenges and efficiently profile the prominent suppliers, leading organizations are augmenting the need for a supplier profiling solution.

The Business Challenge and Our Journey

The client, a renowned automotive electronics manufacturer, wanted to identify the prominent suppliers and segment them based on the cost structure and profits. With the help of industry best practices, the automotive electronics manufacturer further wanted to gain better visibility into the supply chain process and improve the efficiency in the supply chain process. Moreover, through an effective supplier profiling solution, the client also wanted to devise an effective supplier management solution to monitor supplier parts issues, identify risk, and evaluate the supplier performance.

To gain better visibility into the automotive electronics manufacturing space, the procurement experts at SpendEdge carried out an extensive research methodology comprising interviews and discussions with prominent stakeholders in the industry. To improve the on-time delivery of the products, the experts also compiled information from reliable sources such as trade shows, paid industry databases, and industry forums in the automotive industry.

The supply management solution offered by SpendEdge helped the automotive electronics manufacturer profile the potential suppliers and identify their strengths and weaknesses. Moreover, the solution also focused on developing better operational facilities and enhancing the functional capabilities. The client was further able to compare the performance of the suppliers with that of the competitors and identify the best negotiation levers.

Fundamental questions answered in this supply management solutions include:

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The Results

The supply management solution offered by SpendEdge helped the automotive electronics manufacturer improve their supply chain efficiency and build robust relationships with the suppliers. The engagement also focused on preventing supply chain disruptions while maintaining their revenue and reputation. Moreover, the supplier risk solution also helped the leading automotive electronics manufacturer refine their business models and make timely, contextual, and accurate business decisions.

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Supplier Profiling Helps a Renowned Dairy Products Manufacturer Ensure Efficiency in the Supply Chain

Overview of the Dairy Products Industry

The global dairy products space is witnessing promising growth due to the rise in food consumption and the growth of online and mobile shopping platforms. Also, consumers are shifting toward dairy products as it is a convenient and relatively cheap source of protein. To match the supply and demand for products, retailers should leverage the use of technologies to target customers with tailored offerings. The evolving consumer trends toward healthy and clean label products is also compelling businesses to offer nutritious, safe, and affordable products to the customers. In this consumer-centric environment, organizations should also take advantage of their technical capabilities to develop new products and ensure better production efficiency while meeting the quality standards.request free proposal

Here are few factors that may influence the growth of the industry:

  • Welfare problems: The global dairy products space is subjected to continuous welfare problems such as impregnation and induced calving and milking to meet the production demands. This has greatly reduced the average lifespan of a dairy cow from 20-25 years to six to seven years. To counter such concerns, it becomes essential for organizations to shift toward a more organic way of producing dairy products while retaining its quality.
  • Rising environment concerns: It is estimated that dairy farms contribute to about 3% of the global greenhouse gas emissions with cows producing approximately 200 liters of methane daily. The rising concern for reducing greenhouse gas emissions is also compelling organizations to shift towards more efficient ways to produce dairy products.

To bridge the demand-supply concern and meet the rising needs of the customers, organizations are facing the need for supplier profiling solutions. A supplier profiling solution helps businesses profile the ideal suppliers to improve the overall supply process. Moreover, businesses can engage with suppliers and deliver high-quality goods while enhancing economic opportunities.

The Business Challenge and the Journey

The client, a renowned dairy products manufacturer, wanted to profile the most suitable suppliers from a pool of suppliers to reduce the costs pertaining to procurement and inventory. With the help of industry best practices, the dairy products manufacturer wanted to manage and segment suppliers based on their spend and criticality. Moreover, the client wanted to deliver quality products in the desired time frame and improve the overall supply process.

To leverage spend and minimize leakage, the procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the dairy products manufacturing space. To measure and optimize the supplier performance, the experts also compiled information from a wide array of reliable sources such as paid industry databases, trade shows, and company presentations.

The supplier profiling solution offered by SpendEdge helped the dairy products manufacturer evaluate the suppliers based on their spend and criticality. Moreover, the client was able to segregate the suppliers based on purchase value, sourcing risk, and complexity. The solution also helped the client gain a complete view of each supplier to make more timely, contextual, and accurate business decisions.

Fundamental questions answered in this supplier profiling solutions include:

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The Results

During the course of this engagement, the dairy products manufacturer was able to measure and optimize their supplier performance. Moreover, the client was able to analyze suppliers based on various factors such as price, quality, delivery, and service management. The engagement also helped the client define appropriate KPIs to prioritize and target the right suppliers.

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Spendedge’s Supplier Profiling Solution Helps a Prominent Industrial Products Manufacturer Reduce Supply Related Concerns

In the recent years, the manufacturing sector is witnessing a transformation characterized by the increasing focus on innovation, collaboration, and sturdy economic growth. With the growing volatility in the resource prices, industrial product manufacturers are developing frameworks and tools to improve transparency and mitigate supply chain risks. The industrial products manufacturing sector at large comprises of products and services to meet the growing demands of the end-user segments. The rising competition from the end-user segments is forcing leading industrial products manufacturers to realign their business models with the changing market dynamics. Although the industrial products manufacturing space is witnessing a promising growth, owing to the relentless demand from the Asia-Pacific region, additional factors may influence the growth of the market. These include:

  • Shortage of skilled talent: Since the manufacturing sector is in the early stages of production, prominent industrial products manufacturers are relying on innovations to offer market leading products and related services. The top-line and bottom-line objectives in the industrial products manufacturing space can only be met through adequate skill talent. So, it becomes essential for the manufacturers to invest heavily on skill empowerment to address the rising concerns from the end-users.
  • Regulatory risks: The industrial products sector at large is a victim of stringent government regulations. With the growing environmental concern, prominent organizations are facing the need to comply with the regulations while maintaining the product quality. Moreover, it becomes essential for the organizations to meet the regulatory concerns before offering the products to the end-users.
  • Commodity price fluctuations: The recent economic slowdown has greatly affected the manufacturing space with frequent fluctuations in the prices of the commodities. To meet the growing demand, manufacturers are forced to shift their operations and supply base to their end-user segments to reduce costs and risk.

To identify the potential bottlenecks in the manufacturing space and meet the end-user requirements, organizations are utilizing the need for a supplier profiling solution.request free proposal

The Business Challenge and Journey

The client, a prominent industrial products manufacturer, wanted to identify and develop a list of prominent suppliers and further assess their strengths and weaknesses. With the help of a supplier profiling solution, the client wanted to seek ways to reduce procurement costs and the costs associated with inventory. The primary concern for the client was to offer a customer-focused business that aims at product and service optimization. Since suppliers play a pivotal role in meeting the demands of the end-user segments, the client wanted to profile prominent suppliers from a pool of suppliers and deliver quality in the products offered.

To gain better transparency into the supply chain, the procurement experts at SpendEdge carried out extensive research methodology comprising interviews and discussions with prominent stakeholders in the industrial products manufacturing space. To understand the current technological capabilities, the experts also compiled information across proprietary sources such as paid industry databases, company presentations, and industry forums in the industrial products manufacturing space.

The supplier profiling solution offered by SpendEdge helped the industrial products manufacturer identify the relative competition in the market and assess the strengths and weaknesses of the suppliers. The client was able to understand the pricing models for the products offered and reduce maverick spend while maximizing the value of the products. The supplier profiling solution also helped the client maintain a supplier database and segment suppliers based on the spend category.

Fundamental questions answered in this supplier profiling solutions include:

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The Results:

During the course of the engagement, the client was able to evaluate their suppliers through effective analytics and maintain a robust relationship with them. The solution also identified the negotiation levers and segmented the suppliers based on the purchase value, sourcing risk, and complexity.

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Supply Market Intelligence Solution Helps a Leading Food and Beverage Company

The Procurement Pain Point

A leading food and beverage company with a global presence was facing challenges streamlining its sourcing and procurement processes to decrease the overall category spend and secure it’s future commercial success. The client wanted an in-depth understanding of the supply market in terms of supplier relationship management, supplier selection, and evaluation of potential suppliers in the sugar manufacturing market. Furthermore, the client was running into roadblocks identifying price negotiation opportunities and the top suppliers in the market space. Regardless of being one of the top players in the industry, the client lacked the insights to develop effective sourcing strategies with optimal vendor relationships and risk management.

Procurement Insights and the Outcome

To effectually execute the supply market intelligence study, SpendEdge deployed a team of highly experienced analysts with a detailed understanding of the local as well as the global supply market landscape for the specific category. The research experts referred to a vast database of secondary resources including industry journals, news articles and periodicals, webinars, and internal databases to analyze the supply market landscape. This was followed by a detailed discussion with the category experts, procurement managers, and consultants to understand the latest market trends, supply market overview, category cost drivers, and value chain analysis.

Business Impact

In a short span of four weeks, the F&B company gained actionable insights into the supply market across the Americas, EMEA, and APAC regions, along with cost reduction and price negotiation strategies. This supply market intelligence study also helped the client identify top suppliers of sugar in the target regions, analyze their contractual terms, and understand the performance evaluation criteria which helped them with better supplier relationship management.

This case study offers comprehensive information on how our supply market intelligence helped the client with insights into the supply market landscape

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Cost Modeling and Procurement Solutions Help a Leading Mobility Service Provider

Category Overview

Mobility service providers help buyers move their commercial and residential goods either domestically or internationally. These companies offer all inclusive services for re-locations including packing, loading, moving, unloading, unpacking, arranging of items to be shifted, and value-adds such as visa and immigration, insurance, employee, storage, repatriation assistance, and accommodation services.

The Procurement Pain Point

One of the leading mobility service providers for household goods was looking for a procurement market analysis in terms of procurement best practices, pricing models, and key cost drivers in the industry. The core focus was to identify major gaps in supplier market landscape and cost modeling factors for better decision making and strategy formulation. We at SpendEdge, offer a comprehensive and detailed analysis of the category in terms of major cost components, supplier engagement models, and should-cost analysis.

Procurement Insights Offered and the Outcome

To meet the requirements specific to the needs of the client, we carried out an in-depth primary and secondary research. With our vast database of secondary research resources, highly experienced and dedicated analysts, and critical inputs from industry experts, we incline our research to help the client with deep-dive market insights. Furthermore, we follow a three-step research process which includes establishment of cost elements mentioned in the annual reports provided by the listed suppliers, followed by extensive secondary research to understand the percentage break for each cost element within the overall cost structure.

Our procurement market analytics team evaluated the various cost drivers such as variation in sub-contractor fee, increase in minimum wages, adoption of new technology, and volatility in consumable material and operational costs to design the cost model and gain insights on supplier market landscape.

Business Impact

The core focus of this study was to analyze the crucial aspects of cost modeling to get a clear understanding of the cost drivers, cost categories, and cost-saving opportunities. Furthermore, this study also helped the client with a better understanding of supplier selection and evaluation criteria and insights that can lead to optimization of category spends.

This procurement intelligence study offered the client category assessment, supplier market landscape analysis, and procurement best practices.

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Leading Chemicals Manufacturer Identifies Best Suppliers of Raw Materials through Supplier Capabilities Benchmarking

Business Challenge: Issues with finding rights suppliers for prime raw material categories

A leading chemicals manufacturer was facing issues with identification and qualification of right suppliers for its prime raw material categories. They were not following a systematic approach for supplier identification, evaluation and shortlisting.

Situation: The client wanted to implement an early warning system that could help them foresee potential supplier specific risks

They faced challenges with ranking of the identified suppliers based on capabilities and selecting the best among the suppliers that qualified their product and quality criteria. The category managers were clear with the qualities that they were looking in a supplier, but were not sure of the industry best practices followed in supplier selection.

Approach: Deployed a systematic approach for identification and selection of the best possible suppliers

We took a systematic approach that involved finalization of qualification criteria, development of a long list of potential suppliers, and shortlisting of the identified suppliers based on capabilities. We consulted with the client’s category managers to understand the ideal qualities that they were looking for in a supplier and did a sort assessment of the key parameters considered by best-in-class peer group companies. Based on these criteria, we shortlisted the best suppliers from a long list of qualified suppliers. Further, we conducted a deep-dive assessment of the shortlisted suppliers to develop recommendations for the client on the suppliers.

Impact: Client was able to gain deep understanding of the supplier landscape and best practices followed in supplier selection

The client gained detailed insights on the supplier landscape and the key parameters to consider for selection of the best suppliers. They also gained detailed understanding of the best practices followed by the peer-group companies. Based on our recommendations, they were able to partner with the right suppliers in a long-term perspective.

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