How important is supplier monitoring?

6 minutes to read

Managing the processes involved in the supply routine of companies that have a large volume of purchases is quite challenging.

With a considerable number of partners and high figures under their responsibility, any mistake can cause harm and other headaches that end up giving a lot of work to be circumvented. That’s why your company needs to have good supplier monitoring.

About this subject we separate some information that you should know. Check it out!

 

What is Supplier Monitoring?

This is a constant evaluation routine of all the suppliers who participate in your supply chain.

Unlike inventory management, while also having a relationship with ensuring the supply of the company’s needs, this monitoring work usually affects the performance of your company even more, as it is also related to other variables.

Usually varying very little from company to company, supplier monitoring is often focused on providing up-to-date and relevant information about the relationship with each supplier and how it has delivered results.

This evaluation is generally more focused on the quality of products and delivered services, deadlines, costs and pricing policy, practicality of process logistics and material handling.

Using this type of metrics, in addition to other more subjective assessments such as commitment, ease of communication, degree of innovation, among others, an index is created that allows direct comparison between suppliers and a study of how (and how much) they achieve improve the performance of your company.

 

How important it is the monitoring of vendors

As it has already been realized, the monitoring of its partners involved in the supply process is something to be taken seriously, as it directly affects its results, but there are other reasons that must be considered.

Since a good part of the delivery of the products or services that your company provides to its customers suffers direct interference from its raw material and contracted services, its delivery performance, as well as its quality, can be affected by the deliveries of its suppliers.

In addition, the ability to evaluate the savings generated in your purchasing processes will directly impact the increase or decrease in profitability that your company determines at the end of each month.

We should also remember that supplier monitoring also influences the level of supply, which should not suffer from the lack of materials at crucial times or from overcrowding. Any exaggeration or deficiency situation is harmful, and you know it well.

Avoiding nonconformities and possible returns is another very important issue arising from supplier monitoring, as well as the reduction of failures caused by those defective products that may stand still inside your company.

In both cases, it will also be possible to realize the reduction of the need for inspections, saving your money and time.

By achieving better management control, you will be able to provide good supply chain fluidity and integrated logistics, gaining time and having less bureaucratic processes, which will prevent employee rework and expense and unnecessary efforts.

With these optimized routines, you will see increased manageability and agility in your favor, things that will give you more time to deal with other important issues that would normally be in the background.

Last but equally important, there are still two benefits that you need to consider.

The first of these is the optimization of routines and the improvement of process quality.

By achieving this higher level of relationship maturity with their suppliers, both sides will perceive greater ease of communication, which will make the relationship easier, opening up more space for discussion of less operational and more strategic issues on either side.

The second point is that your company will have drawn much more consistent and solid metrics for the comparison of all type of suppliers. This necessarily means much more bargaining power for your business.

Having evaluated the advantages and disadvantages of each supplier, decisions regarding the maintenance or exchange of partners become extremely easy and depend much less on the perception of managers, which greatly reduces the margin of error in the strategy adopted.

 

How to monitor vendors

Because it is a very common issue for many companies and markets, the demand for solutions of this nature is very strong, which encourages great efforts in the development of efficient options and consistent methods of evaluation and control of suppliers.

Therefore, it is possible to find very mature systems with a high degree of interaction and automation to connect all the participants of a supply chain, regardless of their size.

These options consider pre-established metrics and structured evaluation systems, but you can also find chances of doing some customizations, which is very interesting.

The company that you want can also consider developing a system for the service itself, setting up a totally customized product.

In this case, it is necessary to consider an investment of time and amounts a little larger, besides possible needs of correction of errors, until the tool is properly formatted and calibrated for the operation.

What is important, however, is that a good system for monitoring suppliers must consider optimal levels of automation and detailed, up-to-date reporting all the time.

It is also necessary to identify the items of greatest interest and the critical areas that involve the operations, in order to predict possible bottlenecks or points of failure in the processes.

After a while having your vendor monitoring in full operation, it will be very difficult to think of good management without this tool at your disposal.

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ORBIT Logistics is one of the world’s leading suppliers of inventory management

solutions (VMI – Vendor Managed Inventory and SCM) and real-time data acquisition.

Our company, founded in 2003, provides a modular system for supply chain

management and automation, serving global customers from offices in Leverkusen

(Germany), Atlanta (USA), Sao Paulo (Brazil) and Shanghai (China). A highly qualified

team of more than 40 engineers and technicians offers customized turnkey solutions for

process management and monitoring.

 

For more information:

ORBIT LogisticsBrasil

www.orbitlog.com.br

dante@orbitlog.com.br

Phone: (55 11) 3796-1755 / 1756

Cellphone.: (55 11) 96420-1701

 

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