Necessity is the mother of collaboration

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When the supply is cut off, the dissonance is always loud. Supply chain partners need to work together! Nevertheless, the “importance” (that is, order volume) of the supplier or customer often determines the constrained resource allocation.

Still, the need is driving the supply chain towards better collaboration, said Alex Saric, CMO of. Ivara, Developer of spending management platform.The need for a responsible corporate environment, society and governance (ESG) Practice requires detailed communication between supply partners. For example, Apple Inc. audits suppliers for ESG compliance.Hundreds of Apple partners Clean energy Goal.

“We believe this is the focus of many industries, such as the tip industry and distribution, and two-thirds of ESG innovation comes from suppliers,” Saric said. “To ensure and reduce supply continuity, we need close collaboration. [the industry’s] Carbon footprint. ”

The turmoil of the last two years – Covid-19; stranded cargo ships; material pollution; factory fires and global chip shortages – convincing end users to need visibility beyond Tier 1 suppliers. .. In particular, there was a problem with the supply of materials. It only gets worse as constraints contribute to the shortage of semiconductors and Russia’s invasion of Ukraine threatens the global supply of neon used to make chips.

Automated multi-partner communication enables collaboration. “A system that was working properly when you just submitted your order won’t work if your supply chain is disrupted,” Saric explains. “We need constant communication by email, phone, or without contacting a large number of people. There is a move to increase real visibility. [supply] To process. “

Manufacturers are often unaware of their reliance on Tier 2 and Tier 3 suppliers. “We need to bring together different vendors to assess the risks associated with a particular supplier.” Only procurement can be an issue. A few years ago, a major supplier of packaging boards to the chip industry was damaged in a fire. It stopped producing a significant amount of chips.

Supply chain mapping can identify such risks. Gathering information about a supplier, its suppliers, and the people who work in the supply chain creates a global map of the supply network and identifies relationships between partners. You can identify geographic vulnerabilities.

According to Saric, partners also need visibility into planned orders. “The lack of materials has changed the dynamics of our forecasts,” says Saric. So is the lack of chips. Automakers who have lost $ 210 billion in production show why their stakes are so high. Over the past year, major automakers have announced partnerships with semiconductor companies.

“Let’s say our customers share revenue forecasts and inventory levels,” Saric explained. The supplier can be contacted when the completed unit is ready for sale. If a customer needs 10,000 x in May and more x in June, Tier 1 suppliers can share those forecasts with their suppliers. If there is a problem, the supplier can contact the end customer in time to find an alternative source. End customers also have the opportunity to revise their revenue forecasts. “

When sharing is bad

Customers in the electronics industry have historically hesitated to share too much with suppliers and distributors to consider order levels and bills of material unique. If that information becomes available to competitors, it may be used for price negotiations, reverse engineering, or other malicious purposes. Still, if the supplier expects inventory and it’s stuck in a subtier, you need to warn the end customer.

Missing, components

Saric’s example of a company reporting a record quarter while a competitor’s shelf is empty. “The difference is that successful companies are willing to build partnerships,” he said. “We are inevitably looking at companies that are building backup plans for existing relationships. The supply chain has an“ right ”level of transparency. But there is also a lack of trust. We know companies that require minimal order commitment, but that’s not the ideal approach in the end. “”

In fact, many procurement processes contribute to the excess or deficiency of the electrical device supply chain. Customers can place duplicate orders with suppliers and distributors to increase the likelihood of delivery. To save on unit prices, companies order more components than they need. Companies store inventory and resell it in the open market. Deeper visibility into the supply chain can discourage such activities.

Collaboration networks give supply partners flexibility. “No one size can fit all,” says Saric. “There is no industry that properly balances 80/20. We are focusing on 20% of the suppliers that are considered important. Automation is readily available. Partners need to shift spending or approval. There may be, and you need access to the platform to make those changes. A better workflow enables your business. Agile.

According to recent research investment By enabling agility, you can increase your revenue by as much as $ 3 million.

“Recently, I think it’s easier to get partners to agree to share their forecasts,” Saric added. “It really benefits the end customers who are driving demand. You may have as much inventory on hand as possible. For some, this allows for better management of working capital. increase.”

Saric noted that the current regulatory environment and sanctions on Russia have increased global supply risk. “The longer we have to plan manufacturing, the less likely we are to violate regulations.”

Ivalua recommends four steps to improve collaboration.

  1. Implement selected customer programs to encourage suppliers to collaborate
  2. Gain control of enterprise supplier data for 360 degree visibility
  3. Map subtier supplier dependencies
  4. Enables continuous collaboration with technologies that support efficient and secure sharing of information such as forecasts and planned orders

author: Barbara Jorgensen

Barbara Jorgensen

Barb Jorgensen is Editor-in-Chief of the supply chain publication EPS News and has been responsible for the manufacture, procurement and business of electrical devices for over 25 years. Barb spent most of his career at Electronic Business magazine and EBN. He is freelance; then he founded the online publishing EPS News with two industry veterans Bolaji Ojo and Gina Roos. EPS News was acquired by AspenCore in 2017.

https://epsnews.com/2022/04/19/necessity-is-the-mother-of-collaboration/ Necessity is the mother of collaboration

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