Technology & Supply Chain Relationships with Customers & Suppliers


Purchasing

Get closer to your suppliers

The Chartered Institute of Purchasing and Supply believes that working more closely with your suppliers can reduce your purchasing costs by up to 10%, and can help you deliver a better and faster service. Forging more integrated electronic links with your suppliers helps to eliminate the need for day-to-day purchasing, progress chasing and stock control.

Looking after key relationships

Setting up and looking after trading partnerships certainly leads to more productive working relationships, but it does take time. As a result, you may want to reduce the number of suppliers you deal with, in order to align yourself more closely with those who are key to your business. Framework or call-off contracts give you the chance to establish fixed prices with such suppliers over an agreed period of time. Both sides should gain from this: you should be able to negotiate keener prices and the supplier enjoys a consistent workflow.

Purchasing Points to note

Distance is still an object

You may be able to place an order for goods in minutes, but if the order has to be shipped thousands of miles, you may lose your speed advantage. Think about lead-time as a cost that inhibits your flexibility and ability to respond to customer demands. Make sure you understand the full and final cost of goods – you may have to account for shipping, duty, insurance and VAT costs.

Build fast and reliable internal systems

You’ll only get the full benefit from integrating with suppliers if you have fast, reliable internal systems. Many technology upgrades bring long-term cost benefits, allowing production staff to contact suppliers directly and buy what they need when they need it. This can be done without the need for a long chain of command and control over the purchasing process. You will need to make sure that your procedures are easy to follow, and to be clear about who has the decision-making authority.

Think about what you buy and where you buy it from

Consider both how you buy and where you buy things from. Focus on your own efficiency and competitiveness by evaluating the things you do in-house against the cost of buying in the same products or services.

Purchasing Best Practice Implementation Plan

1 Evaluate your suppliers

  • Think about how many suppliers you have and which are the most important – in terms of the money you spend with them and how often you use their products.
  • Use your purchasing records to identify suppliers who have been trustworthy, delivering good products within a time frame that suits you. Aim to build closer relationships with them.

2 Slim down your systems

  • Simplify the purchasing process for non-critical items. Open up purchasing card accounts and let selected staff call off everyday items.
  • Cut multiple ordering and payment by using distributors to supply frequently required items.
  • Integrate ordering, purchasing and stock control systems, so the system alerts you when stocks run low and automatically raises a new purchase order.

3 Integrate systems

  • Talk to your key suppliers about their systems, and investigate integrating them more closely with your own.

4 Team up

  • Build ‘virtual teams’ with your suppliers or with like-minded businesses.
  • Technology solutions, such as linked or shared websites, spread costs and raise profiles, providing customers with a one-stop shop.
Technology & Supply Chain Relationships with Customers & Suppliers business advice – Crown Copyright © 2004-2011
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