The Financial Services Specialists

Cost and performance improvement through better supply chain management

In these turbulent times supply chain excellence becomes central to the executive agenda. Incremental improvement is not enough to offset the shrinking margins and reduced budgets faced by many industries: far more dramatic change is required as organisations struggle to do more with less!

The Bluerock Supply Chain Management service line works with clients across a broad range of areas e.g. Financial Services, Local Government and industries to develop and execute operational strategies.

Committed to helping clients achieve high performance through supply chain mastery, we combine industry expertise and skills in supply chain strategy, sourcing and procurement, supply chain planning and service / relationship management to help organisations transform their supply chain capabilities.

There is clear evidence that post - contract management, or who in reality actually manages the contract once the deal is struck, is a long standing and contentious issue - but  is critically important! All the effort spent striking a deal can be wasted if there is no continuity from strategy through procurement and on to day to day management as the potential benefits will not be realised.

From our experience there is evidence that breakdown is happening all too often and the key is to align the supplier, with the buyer's objectives. There is an emerging theme that the successful organisations are those that align procurement and have staff specialising in supplier relationship to ensure the relevant area / company gets the most value from its suppliers.

So, everyone agrees contract management is important but it is not always clear who should be responsible for ensuring the supplier delivers the promised goods and services and continues to deliver innovative solutions. From our experience we would estimate that up to 20% of companies and organisations do not involve procurement in the contract / supplier management phase.

Most contract managers don't have a background in procurement and there is little collective agreement or collaboration which raises the risk of an incompetent supplier getting away with murder and a good supplier getting frustrated because of the poor relationship management.

Critically, those well negotiated contracts are not working to their full potential because organisations do not have an effective contract management strategy in place and both the suppliers and the buyers time is wasted as service levels are not met and organisations fail to reap the benefits they have negotiated.

 

The Supplier Risk Link - a portfolio view

No organisation exists in isolation; all are connected to partners, suppliers and customers. Large organisations often have intricate supply chains made up of hundreds of companies of all sizes from large global companies to small and medium enterprises (SMEs).

When it comes to managing supplier risk, even major companies and organisations can still get it wrong. Many have no visibility into the total risk along their supply chains and the problems are rooted at the supplier level.

 

Get proactive - monitoring and mitigation are essential

Everybody knows that identifying the relevant risks is important. The earlier you see them, the more options you have to manage and mitigate them. Actively managing supplier risk reduces cost and improves service quality.

A supplier's problem is your problem. Your customers will let you know this by complaining and potentially going else where. You are the service provider but a pro-active approach requires the appropriately trained and skilled resources.

 

Fix it fast - speed and flexibility is key

Risks can come without warning or cascade and monitoring and modelling will help you stay in front of the problem and react to your customers rising expectations. The business environment is increasingly global and complex and no one can afford to stand still and that is exactly why monitoring and mitigation are essential so you know where the risks are.

A disciplined framework for making assumptions is critical, especially when you are dealing with a large supplier base. However, the more suppliers you have, the harder it is to actively monitor risk on a company-by-company basis. That it is important to prioritise - identify and monitor specific indicators that will offer clues on where problems are likely to arise.