S&OP supplier Supply and management

05. November 2021

The supply system is a major issue for a business. It asks companies to adapt to the events that disrupt the Supply Chain, which is why supplier supply is essential for companies and helps them to reduce their expenses, reduce the need for working capital, limit the risk of disruption, guarantee optimal quality and prices.

The supply system means all the processes of identification, willingness to supply, purchase of goods or services carried out by a third party, for example a supplier. Procurement is not only a physical process but also a moral one with the process of negotiation, ordering, transfers of responsibility on extended Supply Chain processes, receiving controls and final audits. The goal is to guarantee efficiency and productivity of production in the company.

Procurement by suppliers

The procurement process is designed in several stages. This is called a supply cycle.

Step 1: Find a supplier who meets your needs and can fulfill your business orders with prices and a level of quality that meets your needs. The goal is to find a balance between items, quantity, price, company, and supplier.

Step 2: Once the supplier (s) has been chosen, the procurement proceeds to the next step.

Sourcing by supplier improves satisfaction, through a seller-to-buyer ratio. This company - supplier union makes it possible to :

  • Analyze expenses: it ensures the transparency of data on the contract to avoid any confusion during payment
  • Supplier segmentation: this allows the efficiency and profitability of the seller's offering to be examined. The goal for the company is to guarantee maximum customer satisfaction.
  • Collaboration with suppliers: A partnership between a supplier and a company must be thoughtful and effective to benefit from an agreement between the supplier and a company. This generates profit, stability, and an assured customer satisfaction rate.
  • Supplier assessment: this checks whether the supplier is making enough effort to meet a company's expectations. It also allows you to see changes and improvements to be made in the supply chain.
  • Risk management: the union between the supplier and the company makes it possible to limit risks and anticipate unforeseen events in the supply chain.

These two steps are very important and allow companies to integrate seamlessly and seamlessly to optimize efficiency and productivity.

How to define the criteria of a supplier ?

The goal for companies is to have a reliable supplier repository. It is possible for a company to have several suppliers to ensure one or more flows of goods and to avoid shortages.

It is therefore mandatory to surround yourself with good suppliers with whom you trust. This allows better inventory management, flow management and order management. The supplier must meet your needs, your sector, and your precise selection criteria.

We must therefore choose :

  • The strategic positioning of the supplier within the company.
  • The value and track record of the supplier in his professional activity.
  • Product and service references to guarantee quality.
  • The terms of payment.
  • The opening of its Information System to take orders, monitor orders, access stocks,

 Obviously, your selection criteria may change and evolve over time.

Processes / Supplier functions

 The functions of a supplier depend on the supply logistics of the company. There are 3 different ones :

  • The procurement function > addresses the process of purchasing products that are necessary for the proper functioning of the company's production.
  • The storage function: provision of a space to store products that will subsequently be used for production or stored until the future shipment and distribution of the product.
  • The stock management function: stock inventory management allows you to manage the referencing of stored products, the quantity of stocks, the follow-up of order deliveries

Replenishment with AI

Artificial intelligence is a big development for businesses. It enables data analysis and the gathering of relevant information. This also applies to the recruitment of information about suppliers. Being in the first place, it is important to nurture a long-lasting and trusting relationship with the supplier.

  1. Stakes of checking receipt invoices :
    There are different types of invoices :
  • Invoice for the purchase of a consumable product that is consumed over a limited period and most of the time short (less than a year). For example, materials, goods, supplies or equipment.
  • Invoice for the purchase of a service or a service provided by a company that provides a service: hairdresser, garage, transporter, etc. to meet a specific need
  • Invoice for the acquisition of a fixed asset: which is used in a sustainable manner (more than one year).

Invoices require many checks:

  • Verification of the mandatory information on the products to determine the conformity of the document.
  • Control over purchase orders, acceptance control of product quality and quantity, prices, etc.

Supplier purchase orders are used by the customer to verify whether the products he has invoiced correspond to and are identical to the products received, this part being able to be digitized.

Receipt slips are useful for the customer to verify whether the quantities of products invoiced are identical to the products received, this part being able to be digitized.

The invoice control allows customers to check whether the prices of the products invoiced are in accordance with those made when ordering.

There are also other additional controls :

  1. Control over sales conditions :

The supplier file and the order form are used to control the conditions of sale:

  •  Balances or tariff advantages planned and granted at the right rates,
  • Deadline for preparation of orders and delivery acquired,
  • Payment terms provided.

2. Calculation control :

Invoices are mostly done in an automated manner via a computer tool. This amounts to avoiding calculation errors, but when they are done by hand it is important to check the calculations well.

The results of the control :

Monitoring can lead to two different results :

  • The invoice is compliant: payable is indicated on the invoice which can then be recorded in the accounts and paid within the shared deadlines.
  • The invoice does not respond to the checks and is therefore non-compliant: the customer must then contact the supplier to report the anomaly (s) or disagreements in the context of a dispute. It is then necessary to recreate an invoice or make an amendment.

Risk management :

Supplier sourcing processes help manage business risks. Identifying products, prices, deadlines and more helps reduce errors and therefore reduce the risk of legal action and unforeseen expenses.

Delivery quality

The term of delivery quality corresponds to the quality of the service provided by the supplier who is responsible for the delivery of an order delivered by a carrier or delivery person to a site. This is an important element that allows to assess the overall experience of a delivery, and which subsequently helps to satisfy customers and facilitate their shopping experience.

Indeed, a successful delivery is one of the only ways to satisfy a customer.

 

To improve the quality of deliveries and therefore avoid human errors, excessively long lead times, late deliveries, here are some approaches that are being studied specifically :

  • Adopt direct delivery : drop off directly

When the dimensions of the package allow it, e-merchants can obtain postage by post.

This reduces costs and improves customer satisfaction:

  • More convenient for the customer: no need to go to a relay point, make himself available or wait for the delivery person,
  • More economical for the merchant: he does not manage the return of orders and non-delivery.

Urban logistics: pooling



Consumer demand continues to grow in a few years the number of packages will double. The blatant explosion of e-commerce will therefore require rapid automation of delivery processes and the deployment of points of sale in both rural and urban areas.

Urban logistics responds to the consequent need of multidistribution and increasingly connected consumers. It is a perpetual renewal.

Businesses need equipping themselves with technology and smart infrastructure in order to be able to meet and massify demand. The deadlines are respected, and the means of distribution are multiplied.

Pooled logistics combines several types of deliveries with several freight routes. Delivery and pick-up and distribution points vary depending on location, timing, type and function of a product and the product target.

There are three types of shared deliveries :

  • Ship from hub: urban mini-warehouses and e-commerce becomes more ecological: bicycles, cargo bikes, on foot.
  • Ship from store: The goal is to satisfy customers as much as possible and therefore to capitalize a set of stocks in store. This reduces costs and distances to travel, lead times, more precise deliveries, reduces negative effects on the environment.
  • Store to store: replenishment takes place in real time since it only takes a few kilometers to travel the distance between the store and the point of sale. This saves time and money since the costs are lower.

Pooling : first and last mile.

Management of the first and last mile :

  • The logistics of the first kilometer :
     
    This is the first process in the supply chain when the customer has placed an order and ends when the delivery is ready to go. This delivery is either delivered to your home or via intermediate points such as distribution centers, urban hubs, warehouses, etc. The first mile is essential for order management and its optimization.
  •  Last mile logistics :
    This logistics represents the last link in the chain when the delivery is hand-delivered to the customer. This is a challenge for businesses since there are many packages.
  • First and last mile :
     
    The difference between the first and the last mile is in the organization in which they are run.
    The first mile is the first step in the logistics chain and begins upon receipt of the customer order and includes: its preparation, its packaging. While the last mile is the final step, which is the delivery and return of the product to the customer.
     
    The last step is to get the order to the customer or the disposition to a store.
     
    The first kilometer deliveries are large (pallets, consolidation, etc.). Those of the last mile are smaller in volume and to satisfy customers with fast and efficient delivery.
     
    Today's businesses are trying to limit the negative consequences that can result from poor first and last mile management.
    E-commerce now represents 80% of the number of packages delivered. Who says E-commerce says delivery and logistics transport?
     
    This logistics of the first and last mile shows the massification of distribution resources while optimizing business management.

Advantages:

  •  Better carbon footprint:
  • Reduce the geographical distance for a product or service delivery to a customer
  • E-commerce and rapid deliveries represent a significant environmental cost: thus, deliveries must be sectored according to the size of the packages.
  • Ecological impact on parcel returns
  • Pooling over the last kilometers of delivery, flows and means of delivery (vehicles, equipment, locations, etc.)
  • Pooling without cost explosion

The goal of good first and last mile management makes it possible to minimize transport costs and meet customer needs: relay point, click and collect, drive, urban hubs, etc.

However, the management of the first and last mile may turn out to be a longer management, but it is still more effective.

How to integrate a management solution into your ecosystem ?

  • Management of customer and supplier orders: dashboard, orders, responding to demand, catalog management.
  • Import / export management: import data into your management software and perform data updates through import: export data to gain ease of use.
  • Reduce delivery times
    The goal for a business is to provide the best possible satisfaction to its customers. That’s why it has to adapt its deliveries. Indeed, consumers generally want to receive their deliveries as soon as possible and on time.
  • Create a successful customer experience when he opens the package
    Unboxing, or what is called opening the package, is the most awaited moment by the customer. The goal is to make this task easier and to make it more enjoyable.
     
    The easiest and most efficient way to open the package is to place a tear strip on the package. This reduces the opening time of the package and therefore ensures customer satisfaction.
  • Environmental management: waste management.
    Ecology is a key factor in the news. Many consumers want to take care of the environment and reduce their waste. Therefore, to satisfy their customers from A to Z, companies can adapt their packaging for a greener solution.
    There are therefore several techniques:
    -       Eco-packaging,
    -       Recyclable packaging,
    -       Service that offers removal of packaging
  • Reverse Logistic : 
    Reverse logistics are essential for the success of a business and its management. This reduces costs but also increases the turnover of a company.
     
    The Logistics Reserve enables success :
    -       In real time: monitor products and equipment in real time.
    -       360 ° vision for an extended Supply Chain: management of product returns for a complete vision of merchandise stocks.
    -       Traceability: tracking of packages and goods throughout the delivery route.
    -       Transfer of responsibility: monitoring the delivery of goods, control of transfers.
    -       Management of returnable products: crates, pallets, boxes are returned to the supplier.
    -       Real-time litigation information: collect information on products and their designs. Allows you to resolve disputes and problems that may arise.

Why procurement software ?

A procurement solution allows a company regardless of its sector to receive quality goods at competitive prices. This allows companies to offer their customers a wide choice of products and ensure optimal customer satisfaction.

If the supply chain is properly developed it allows for the establishment of reliable external relationships with suppliers. However, the automation of services via software for automating the procurement process allows :

  • Cost reduction,
  • Increase in productivity,
  • A reduction in unnecessary invoices and papers (digitization),
  • Reduction of calculation errors and human errors,
  • Standardization of transactions,
  • Shared visibility and real time,

    The purpose of procurement software is to collect and share a set of data instantly with a business so that the business can either confirm or make changes as needed.

    Automate financial processes :
     It also automates financial processes as it tracks spending trends to show business fluctuations. In procurement software, orders are automatically consolidated.
     
    In addition, the notion of alerts is present in procurement software: users of this software receive an alert when the supplier changes prices and can access a catalog of available suppliers.
    Procurement and its management as well as suppliers are essential operations within a company. They help boost profits, ensure efficiency and productivity in the business, but above all improve the experience and overall satisfaction of the supplier.

    Centralization of product catalogs on several channels :
    Procurement software also makes it possible to centralize your product catalogs across all your channels: e-commerce, Marketplace, paper, etc.

    PIM : centralization management of product catalogs for all entities

    Centralized product management brings many benefits. Indeed, it is above all important to be as transparent as possible about products and to customers before they proceed to the purchasing stage. This allows them to benefit from a successful experience across the various sales channels that your business offers.
     
    There are two ways to centralize products :
  • The PIM which allows you to manage all the data, which is textual about your product,
  • The DAM: manages the media data of the product: video; photos, sounds, technical sheets, etc.

    Both methods have the same goal: to distribute your product across all of your communication and distribution channels: e-commerce, Marketplace, catalogs, billboards, leaflets, technology, etc.

    Differentiate your product catalog :
    Benchmark : 
    Marketing technique allowing a company to observe other companies in particular their performance to compare and analyze competing products and services. This aims to promote differentiation and the design of new innovative products.
     
    This Benchmark technique improves competitiveness within the limits of competitive compliance and the productivity of each company offering new products on the market.
    We differentiate 4 benchmarks :
    -       Internal
    -       Competitive
    -       Functional
    -       Horizontal
     
    Product catalog differentiation is not just about innovation, it can be differentiation through deliveries, returns, packaging and efficient e-commerce.

    Validation workflow :
    The validation workflow makes it possible to dematerialize and automate the approval process, whether internal or external. The initially non-modifiable contract then becomes a communication tool where each participant can add their recommendations, modifications or prevent a disagreement.
    The workflow will thus be adapted to the company and its members. This makes it possible to automate requests, whether internal thanks to the agreement of employees between them but also external thanks to the increase in productivity.

    Taking into account the theoretical and actual delivery times (OTIF)
    On time in full is an essential indicator in business. This is how often a customer receives their order and on time.
     
    The OTIF is determined in two reference times :
  • The date on which the customer requested delivery: On time Delivery to Request.
  • The date promised by the supplier / company: On Time Delivery to Commit.
     
    All orders that are early, late or lost are said to be KO. On the other hand, the one that exactly meet the customer's expectations is OK.
     
    OTIF calculation: sum of orders perfectly delivered / sum of orders to be delivered) X100 Real-time mobile application for disputes

    Mobile applications on smartphones allow these users to have real-time access to key data :

    Mobile applications on smartphones allow these users to have real-time access to key data: planning, letter, proof of delivery, purchase order, etc. For supplier supply, this allows the supplier to transmit data instantly such as that the follow-up of deliveries, the follow-up of the incidents, etc. this allows a simplified treatment of disputes.

    1.     More traceability for each transport
    Using a mobile application allows you to bring optimal traceability to your processes. 
    This provides a precise and reliable view of the progress of each transport and each supplier: transfer of responsibility, geolocation, remaining kilometers, proof of delivery: everything you need to know about transport.

     
    2.     Dematerialize actions
     
    The mobile application for transport management and delivery management allows maximum use of the dematerialization of processes. 
     
    Here are the advantages :
  • The end of re-entries: all company data is redirected to the inventory management software. It saves time and productivity,
  •  The end of costs associated with printing and shipping documents (letters, mail, delivery slips or invoices);
  • Fast and reliable invoicing

S&OP supplier Supply and management

Monstock is a collaborative solution that meets your supplier sourcing needs. Correctly select your supplier that meets your needs. Automate and revolutionize your inventory management thanks to Monstock replenishment solution with IA.

Meet the needs of your customers by optimizing your delivery and workflow processes.

For more information : contact the Monstock team.

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