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Sole Source Suppliers? Your Future Depends on Supplier Relationship Management

Here is a great article on how to effectively manage a sole sourced supplier. Too many organizations put themselves at a tremendous risk by poorly managing a sole source relationship. Suppliers that know this can use this to their advantage and take advantage of this situation if it is not managed properly.

Sourcing Guy

SRM maize blue

You’ve tied the knot; is it effective?

Today, procurement and supply chain managers focus more time and energy on managing sole source suppliers than I’ve ever seen in my 30+ years in the profession. Typically these suppliers provide a technological edge, are locked in by regulatory requirements or are the sole survivor of a massive industry consolidation. Many supply chain practitioners aren’t effectively managing these supplier relationships that are so critical to their business’ success. As a result of the mismanagement, the supplier exercises a strong influence on the business as a whole, has a tremendous amount of power in the business, maximizes revenue and profit and takes advantage of the fragmentation of procurement and supply chain managers across a global business. The key to survival is effective supplier relationship management; as Joe Payne, in his MyPurchasingCenter.com post last month says “the future of procurement is SRM.”

Many clients have…

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5 Parcel Challenges You Can Overcome to Transform Your Small Package Shipping and Crush the Competition

Cardboard boxes are delivered all over the world on the conveyor

Cardboard boxes are delivered all over the world on the conveyor

This article was written by Michael Rogers of 4 Way Logistics and appeared recently on his blog.

When you are running a small to medium-sized business and regularly ship small packages and parcels, you face certain challenges that your larger competitors do not have to overcome. Companies that ship thousands of small packages a week often get lower rates and better service than their counterparts who may only ship 25 or 50 parcels each week. A 3rd party logistics company (3PL) can help you overcome those challenges so you can stay competitive with your larger competitors and crush your smaller competitors. Take a look at five of the most common challenges and see how a 3PL  can provide the solution to each of those challenges.

  1. Complex rules are hard to understand and shipping costs are high

Big package delivery companies like UPS and FedEx have strict and complex rules that govern every aspect of the shipping and delivery process. As a small business owner, you may not have the time or inclination to read through all of the rules before shipping a package. Do you know the size and weight limitations on parcels? Do you know what is or is not allowed to be transported? What happens if your parcel is lost or arrives in damaged condition? In addition to understanding the terms of service, you also have to be concerned about price. What you pay for a shipment can depend on the level of service, when you want your parcel delivered, insurance, and a number of other factors. A 3rd party logistics company is familiar with all of the complexities and can find ways to lower your shipping costs.

  1. Carrier shipping information systems are basic and of limited value

Carriers have their own platform that is designed to track packages and provide a limited amount of information to customers. If you want better and more useful reports to analyze your shipping costs and budget for the future, your 3PL partner can custom design the type of reports that will better meet your needs.

  1. Complex pricing structures and numerous transactions leads to errors and overcharges. Costly audits need to be done in a more affordable way.

Carrier supplied software does not make it easy for you to retrieve the information you need to do a thorough audit of the charges you incurred. Rather than investing hundreds of manpower-hours and thousands of dollars in custom software to audit your freight bills, you can turn the job over to your 3PL provider. They have the technology and trained staff to do a thorough audit, saving you time and money.

  1. Choosing your best shipping option is difficult

While price may be the most important factor in deciding how to ship your parcels, there are other factors to consider. Does one carrier offer better customer service than another? Can you have your packages picked-up or delivered after business hours or on the weekend? Is it more affordable to ship your packages with an LTL carrier rather than a parcel delivery company? All of these questions, and more, can be answered objectively by your 3PL provider so you can make the smartest shipping choice.

  1. How can you avoid being penalized with higher rates when you are a low-volume shipper?

A 3PL can help you leverage other shipping and volume contracts to help you get lower rates. A postal consolidator is one type of arrangement that will lower your shipping costs and allow you to compete with your larger competitors and crush your smaller competition.

Question:  Does small package delivery seem too costly?

Is It Time to Change Vendors?

This is really great insight coming from a former CFO of UPS about how the logic of changing suppliers. Organizations often struggle on how to determine when to make changes with current suppliers. This article definitely provides tremendous insight how to make that determination.

Longitudes

As chief financial officers move beyond traditional roles, many are finding that vendor selection is becoming an important part of their expanded duties. When deciding which vendors are the right fit, CFOs should distinguish between those who simply supply a product or service and those who have the ability to challenge and collaborate in ways that make us and our companies stronger.

When is the right time to change vendors, and what is the best way to go about it? Those are extremely important questions that take on strategic significance and can have serious consequences.

[pullquote align=right]”Acceptable” is not good enough to meet the aggressive goals and objectives of most companies today.[/pullquote]It’s easy to become comfortable with vendor relationships, especially those that have existed for a number of years and where the service and results delivered are fully acceptable. But acceptable is not good enough to meet the aggressive goals…

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The disappearing world of Procurement

Invisible man

Here’s a great article by another procurement expert. Thanks Tim for the great insight.

Commitment Matters

Too many procurement groups are on a path to nowhere. They are missing the golden opportunities being created by today’s dynamic markets.

That is the conclusion I have to draw from the many conversations I have with practitioners, consultants, executive search firms and business executives. In a fast-changing world, the possibilities for growth are numerous. But in many cases, procurement professionals and their leaders are simply ignoring them because they do not fit existing paradigms, or they are too busy to pay attention to the warning signs.

For years, supply chain consultants and professional associations have been hammering on issues like compliance, category management, control – all based on the assumption that commoditization is the route to sustainable savings. This has led procurement into increasing isolation, making them masters of process, but disconnecting them from meaningful relationships with other business functions or suppliers. Indeed, many seem to glory in this isolation, feeling…

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What’s the supply chain equivalent of Carmageddon?

Carmageddon

Containergeddon.  That what these West Coast Port negotiations are beginning to feel like!

How many industries can you completely upset your customer base costing them lost sales, tying up their cash flow and causing economic havoc all at the same time and get away with it?  Not many that I can think of, but the ports and the unions seem to be doing a good job accomplishing all of this.

This past weekend, the west coast ports decided to close down adding fuel to the fire in the negotiations in which the unions have already been working without a contract for several months now.  It is about time we see some leadership step up and get this resolved.  The collateral damage is widespread and growing.  From truckers wasting time at the docks, warehouses with under-utilized people to companies losing sales due to inventories sitting in the supply chain gathering dust. Companies are even getting hit with severe financial penalties because they can’t fill orders due to the constraint in the supply chain.  Businesses that are dependent on importing and exporting products are feeling the pain and it is only getting worse.  There are limits to how much these companies can take.  According to the National Association of Manufacturers and the National Retail Federation, the last port disruption costs the entire US economy several billions the last time we went through this back in 2002.  This could be even worse.

How many businesses have to go under?  How many people have to lose their jobs?  This is the supply chain equivalent of shutting off several lanes of the 405 freeway in LA on a Friday afternoon before a big holiday and telling everyone to just deal with it.  The negotiations have gone on long enough behind the scenes with virtually no resolutions.  It is time for someone to step up.  Who’s it going to be?

Southern California Supply Chain blog

Thanks for visiting the Southern California Supply Chain Blog where.  I am Richard Montellano, the Global Supply Chain President for Above the Standard. We are global procurement solutions provider that helps organizations get the most out of their own expenditures.  There are many links that go into supporting an effective supply chain from supplier sourcing, risk management, qualification, logistics, warehousing management, packaging, procurement and supplier management.   All these links can be overwhelming to a lot of organizations.

In my experience, I have found many of these organizations find a way to get by, but do not have the ability to take advantage of all the advantages there are throughout the supply chain.  This “getting by” mindset unfortunately ties up cash flow by leaving money on the table due to inefficiencies or outdated processes.  I can help organizations of all sizes get that cash flow back.

My approach to supply chain starts with a collaborative framework in which all parties can benefit.  This approach helps organizations benefit by getting a turn-key supply chain solution delivered right to them. This blog is intended to express creative ideas, opportunities and some challenges I come across.   If you have an idea or project you would like to discuss feel free to contact me.

Thanks.

Richard Montellano

Global Supply Chain President

Above the Standard Procurement Group