A strategy for procurement and delivery

27 May, 2009

The nature of today’s markets and the increasingly interlinked world in which we live means wholesalers and distributors need to be able to react rapidly and effectively to an ever-faster pace of change.

Buoyed by the increasing influence of the web in everything we do, such companies are becoming globalised, as employees, suppliers and customers connect and exchange information freely over the internet.

However, without the appropriate technology in place for procurement to reduce operational costs and improve efficiency, such links can prove to be a double-edged sword for businesses in the fight to remain competitive in this volatile global economy.

The financial consequences of inefficiencies and poor business integration can be highly damaging, but can easily be addressed by adopting an appropriate business software integration strategy.

So, what should businesses do to optimise their procurement and distribution processes?

Keep a clear business vision

Clarity of thinking is essential in maintaining operational visibility, without which complex stock management and procurement procedures are likely to suffer. This can lead to spiralling costs and lower margins, as the business fails to deliver the right product to the right customer at the right time.

For wholesalers and distributors, business automation in areas such as predictive forecasting and time-phased planning of supply versus demand addresses this by reducing human error and adding intelligence to the process, with real-time visibility enabling more informed decision-making.

Protect the bottom line and protect the environment

Use automated workflow, alerts and planning tools to improve sales order processing, stock allocation, picking and delivery. This not only cuts costs but also reduces the carbon footprint of the business, through lower diesel usage and reduced journey times and distance covered.

React to global change

In the global economy, sourcing new suppliers offering the best price with improved service levels, irrespective of location, is equally crucial in the battle to compete. This demands proper historical cost analysis in order to accurately assess, in real time, the best combination of price, delivery and quality.

Improve procurement accuracy

Automation reduces errors and streamlines the supply chain, by bringing simplification and greater collaboration with customers and suppliers. An enterprise resource planning (ERP) system with the right embedded intelligence will enhance the ability to select appropriate suppliers, calculate volume or promotional prices and set anticipated delivery dates, so reducing costs and improving customer service.

Ensure compliance

The improved visibility and audit trails which result from automating distribution processes also enables the business to ensure legislative compliance, for example, under the EC Packaging Waste Directive or the Sarbanes-Oxley Act.

Create a lean business

Today, the elimination of waste sits at the heart of the best manufacturing methodologies and management thinking. This applies equally to all sizes of business and requires full buy-in by all stakeholders, in identifying and then fixing broken processes. In terms of IT support, the business will typically require a company-wide ERP system, which, ideally, will be able to adapt to major process changes without the need for costly external consultancy support.

Implementing lean principles does not have to be a major financial investment. It lends itself to a focused, small-scale start-up, in which much of the initial investment will be in the team’s time and commitment in implementing the first changes. A snowball effect of enthusiasm will then follow as employees realise they can directly impact the company’s success through implementing lean methods of efficiency improvement.

Positive results

Not only will the business benefit, but customers too will gain from being more closely connected. A robust ERP system helps foster a genuine sense of understanding and information-sharing between organisations, something almost impossible to achieve with old manual processes.

Every action taken is logged in the system and the appropriate response automatically actioned as required. This may be no more than generating an email response to a specific query, or perhaps initiating a customer service call every few months. However, it puts an end to the common occurrence of customers ‘falling through the cracks’ due to human error.

Business automation plays an important role in improving customer loyalty, by maximising the value in procurement and so improving service and delivery levels. Equally importantly, by analysing buying patterns and flagging up changes in individual buyers’ behaviour, it maximises up-sell and cross-sell opportunities; this is critical at a time when it is significantly more cost-efficient to sell more to existing customers than to generate new business.