Member Article

Improve Your Supplier Relationships in 3 Steps

Improving cost effectiveness and efficiency will help improve just-in-time manufacturing supplier relationships, adding additional value for your customers.

As the name implies, just-in-time manufacturing (or JIT) relies on processes coming together in a timely fashion. These processes must combine relationships with technology for the greatest efficiency and mutual benefit for all parties.

Sharing of pertinent information is critical to the success of interdependent systems, be it through your own business units, or with your supply chain partners. Supply chain integration uses technology to link ERP and production systems between customers and suppliers for:

• Sharing key indicators.
• Passing information automatically between systems to reduce operator error and omissions.
• Increased collaborative potential.
• Efficiency and cost savings.

There are several ways to increase collaboration between partners, from full supply chain integration, to automation of certain key processes. Here we look at how automation can improve just-in-time manufacturing for the benefit of suppliers, customers, and their customers too.

1. Supplier portals

Supplier portals act as a central access point for suppliers and customers to share key indicators and to manage their just-in-time manufacturing orders.

Perhaps the best known example of a supplier portal belongs to aerospace manufacturer Boeing, who use such a system to manage the 23,000 suppliers who provide parts for the Dreamliner aircraft. Using the portal, Boeing has implemented a just-in-time manufacturing process that can complete final assembly of a 330-seater passenger plane in just three days.

The key aspects of a supplier portal are:

Order requirements are posted online allowing suppliers to tender for supply, reducing the time and effort required to manage the procurement process. Both supplier and customer are kept up to date with order progress at all times through the portal. All information relating to the project is stored centrally so parties can answer their own queries, reducing both overheads and delays for both parties. Increase overall production efficiency by keeping all parties fully informed of progress and allowing for better planning of each stage of the just-in-time manufacturing process.

Despite being named ‘supplier’ portals, when implemented correctly, these platforms actually benefit both parties and make them a powerful tool for just-in-time manufacturing success.

“The internet has extended store opening hours, so that consumers now expect to be able to place orders 24 hours per day, 365 days a year. Why should commercial business operate differently?”

2. Order automation

Integration of stock systems supports KANBAN and VMI (Vendor Managed Inventory) supply modes which both reduce the costs of interaction and enhance just-in-time (JIT) processes.

By making stock control systems accessible to their suppliers, replenishments can be ordered automatically once levels drop below a pre-defined level. For just-in-time manufacturing, the headline benefits are:

Never running short of raw materials and supplies in future. A reduction in stock control measures and manual management. Lower warehousing and storage costs. Suppliers also benefit from advanced warning about stock needs, allowing them to better manage their own production and supply chains.

Because both parties are better able to manage their supply chains, the relationship between customer and supplier should also improve.

‘Organisations distinguishing themselves as procurement leaders are those driving towards paperless contract management automation.’

Procurement contract lifecycle: assessing the value of contract automation – Aberdeen Group

3. Invoice automation

Just as automating your order process reduces inefficiency and improves supplier relationships, so too with your billing. Upon completion and delivery of a discrete manufacturing order, an invoice is generated automatically and emailed (or transferred electronically) to your customer.

Moving your just-in-time manufacturing process to automated invoicing:

• Reduces the timeframe between billing and payment.
• Reduces the margin for calculation errors.
• Reduces the opportunity for billing disputes, and delays resulting from them.
• Improves cashflow.

By increasing the accuracy of invoicing, businesses have a better chance of safeguarding, or even improving their cash flow. A corresponding fall in payment disputes will also help to improve supplier-customer relationships even more so if you implement an automated payment system too.

‘E-invoicing demonstrates cost savings of up to 80%.’

European Association of Corporate Treasurers

Remember: improving supplier relationships relies on automation

Much of the work to improve supplier relationships can be done by choosing the right ERP system that increases automation. The keys are:

• Reducing manual intervention and the risk of error.
• Increasing data sharing to help suppliers better manage their own supply chain.
• Improving access to data across your just-in-time manufacturing process for increased accuracy of stock management, order fulfillment and bill payment.

Unsure whether you’ll get greater ROI by upgrading your software or investing in a new ERP system? Copy and paste this link http://bit.ly/1NH9LhF into your browser and read ’Microsoft charging you for an upgrade? 5 reasons why now is the time to change your ERP system.’

This post first appeared on the Sanderson blog.

This was posted in Bdaily's Members' News section by Paul Bywater .