Managing Suppliers: Race to Win, Rather Than to the Bottom!
Continued consolidation of the food supply base will lead to more powerful and assertive customers in some markets. These customers are placing increasing demand on the entire supply chain for reduced cost and higher levels of value delivery.
While many companies focus on price reduction as a solution, they soon realize that there is only so much supplier margin and they soon become in effective in trying to meet the increasing demands of the customer and company management. They also realize that there is a significant cost and time involved in changing and developing new suppliers.
The solution to increasing demand for value is to get business alignment across the entire supply chain, which requires value-based relationships. In an upcoming webinar presented by TraceGains, William L Michels, will speak about how a company can build such a process that delivers cost and value improvement year on year, and how you can better understand SRM (click here to register).
Michels is President of ISM Services, a specialty training & consulting company that focuses on procurement and supply chain management. In a chat with Food Safety Tech, Michels provided a sneak-peek into his presentation.
FST: Supplier Relationship Management is critical and challenging. What aspects of this will you be addressing in this webinar? Why are these important to food manufacturers today?
Michels: The food industry has been consolidating for some time, and now it is essential that food companies align with the suppliers that can meet their overall business goals for cost, quality, safety and value delivery. The drive for continued consolidation will ultimately impact supply chains leaving integrated, exclusive and competing supply chains. Only the leanest, most efficient, and aligned supply chains will provide maximum competitive advantage to the end customer.
In the past many companies have focused on price, but as buyers gain transparency on supply chain cost, yields and efficiency, they need to manage the supply chain and optimize value delivery. SRM is the process by which companies can integrate the supply chain and extract real value.
FST: In the webinar you will be speaking about how to identify which suppliers are good candidates for SRM. Can you give us an idea about that?
SRM is a resource-intensive investment with a big pay back, therefore, we need to align with the most strategic suppliers to assure that we can get the maximum value and competitive advantage. The webinar will provide a template for choosing the correct suppliers.
FST: What are some common SRM errors/ omissions that you notice? And how would your webinar help address these?
Companies fail to look beyond the immediate first tier supplier in the supply chain and fail to recognize all aspects of the relationship that will lead to competitive advantage for both firms. Through the SRM process, companies can improve speed to market, total cost of ownership, quality, availability, and risk management. The webinar will detail how every supplier in the supply chain can incrementally add value.
FST: How is SRM evolving and what does this mean to the food industry?
If food companies continue to focus on price, rather that cost and value, the food industry will not progress far. Driving already slim margins lower will not provide the necessary capital to invest, innovate, create new processes and add incremental value. By recognizing the need for transparency and linkages of business objectives across the supply base, there is an opportunity for true transformation. This is an evolutionary process.
Michels will talk more on this topic in the webinar. Click here for details and to register.