Supplier Management and Digital Transformation Go Hand in Hand

Supply chain disruptions are not a new phenomenon. Buyers and suppliers have long been impacted by natural disasters, socioeconimic unrest, transit delays and other events that impact procurement and production. 

But as supply chains have become increasingly global and complex, these interruptions have scaled, too. Major events like the U.S.-China trade war, the COVID-19 pandemic, soaring transportation costs and a global energy shortage have pushed many into crisis mode.

To maintain a competitive advantage in a challenging business environment marked by volatility, businesses are focusing on digitizing their supply chain networks. Digital transformation of the supply chain allows businesses to diversify sourcing capabilities with minimum risk and enhance supplier relations management (SRM). Businesses that effectively digitize their operational footprint will not only better traverse today’s supply chain crisis, they will also be better positioned to thrive far beyond the pandemic. 

Supplier Diversification

Supply chain diversification can help businesses skirt around delays and rising costs. Even prior to today’s pandemic-induced crisis, supply chains were being rerouted as businesses first faced rising labor costs in China and later found themselves caught in the crossfire of the U.S.-China trade war. At that time, businesses increasingly adopted a nomadic sourcing framework to help shift production and sourcing to the lowest cost and highest value geographies. When the pandemic took hold, this same nomadic sourcing framework proved helpful for maintaining operations and asserting supply chain agility. 

Two-thirds of buyers with global supply chains planned to engage suppliers in new regions this year, according to a second-quarter survey by supply chain audit company QIMA. However, major shifts in procurement do not and should not happen with the snap of a finger, as there is always the possibility of new risks emerging when a business onboards a supplier it has not worked with previously. Historical data from QIMA confirms that periods of high diversification are followed by increased quality, safety and ethical risks — which are costly to businesses in the long-term. 

Digital Inspections 

Effective digital solutions can help reduce risks and ease the pain points of diversification. For example, a digital inspection platform can increase pace, accuracy and ease by leveraging a tablet or other mobile device to upload reliable data on the field and issue standardized reports. A mobile device for frontline factory workers, synchronizing data in a cloud-based platform shared with the supply network, is mandatory amid travel restrictions and quarantines.

Digital solutions also help resolve some of the challenges businesses face when onboarding new suppliers or hiring new inspectors, especially those in unfamiliar geographies. Business can gain a full circle, real-time 360-degree view of where suppliers stack up in terms of production, quality, social, environmental and ethical compliance measures. 

A practical, long-term approach is key for ensuring a successful digital transformation journey. By taking a sustainable approach to innovation, businesses can assess each technology as it comes to market and determine if, why, when and how it makes sense for them to implement.

For most businesses, inspections are a solid starting point for supply chain digitization. Essentially, digital inspection processes strike the very core of operations and inform key decision-making, including identifying failure rates of individual factories and inspectors, defect rates of specific products at individual factories and country-by-country performance levels. From day one, a digital inspection platform pushes efficiencies, quality and ethics throughout the supply chain.  

The first step to digitization should be taking a pulse on the supply chain in its current state, identifying the risk profile that each supplier brings to the table. Once potential risks are attributed to suppliers (as well as their tier-2 suppliers and beyond), the digital transformation journey can then begin by identifying the best solutions for bridging gaps, eliminating bottlenecks and hedging additional risks that may emerge with current and future suppliers. 

By standardizing workflows and implementing checklists for inspections and audits, businesses can build trust with their suppliers and partners, including factories, raw materials suppliers and vendors. Digital platforms also support proactive, data-driven decision making, deploying corrective action using real-time communications and risk analysis. Explicitly, businesses can anticipate problems before they wreak havoc.

Network Communication 

When it comes to today’s supply chain crisis, many of the present issues were bubbling under the surface long before the first case of COVID-19 was ever reported. Notably, legacy supply chain strategies take a “comply or die” approach, managing factory suppliers through top-down, one-way communication. 

While legacy models were once designed to minimize costs, reduce inventories and maximize resources, paper-based processes today consume greater costs and overuse resources for repetitive tasks. Moreover, the reconciliation — the moment of truth for whether or not a supplier is meeting standards — occurs too far down in the supply chain lifecycle. When an issue is finally detected, it’s usually too late to rectify without additional expenses. More troubling, businesses still using pen and paper don’t have easy access to historical or real-time data that can help them drive continuous improvement among their suppliers. 

Supplier communication and quality were cited as a “serious issue” by 59% and 41% of respondents, respectively, to a recent survey by QIMA. However, compared to their counterparts, businesses with highly digitized supply chains cut concerns of supplier communications and quality in half.

Notwithstanding its immeasurable tragedies, the pandemic has presented profound teaching moments. When it comes to supply chain management, businesses have learned that they cannot succeed alone and must protect supplier relations. This rings especially true in the recovery and rebound period as shortages, volatile demand and uncertainty will keep supplier diversification at the top of the priority list. 

To evade the pressures of engaging new suppliers in unfamiliar geographies, SRM is perhaps the single most critical differentiator that will determine supply chain success or failure. In a landscape rife with supply chain risks, businesses should only rely on trusted partners. How do businesses identify those partners? By opening lines of communication and implementing smart risk analysis and score cards, businesses will be in a better position to forge relationships with trustworthy, high-performing suppliers.

Therefore, to successfully digitize the supply chain, businesses must bring their suppliers on board the digital transformation journey and unlock meaningful benefits for them too. For instance, a digital quality control program can be reinforced by innovative features such as integrated inspector apps, actionable insights, automation tools, configurable workflows, API integration and interactive reporting. To support supplier onboarding, many digital platforms also offer training courses on operational workflows and best practices.

Digitizing supply chain management fundamentally transforms and bolsters the synergy businesses have with their entire network. Relationships are no longer just governed by the standard client-vendor contract, but instead built on partnership and powered by teamwork. This type of collaborative framework empowers businesses to future-proof procurement processes and forge relationships with suppliers they can trust and grow with for years to come.

By mitigating risks and harnessing the power of symbiotic partnerships, businesses can gain control of their digital transformation journey to weather the supply chain storm and chart a new path forward toward resiliency — no matter what comes next.

Sébastien Breteau is founder and CEO of QIMA, a quality control and compliance service provider.

Supply chain disruptions are not a new phenomenon. Buyers and suppliers have long been impacted by natural disasters, socioeconimic unrest, transit delays and other events that impact procurement and production. 

But as supply chains have become increasingly global and complex, these interruptions have scaled, too. Major events like the U.S.-China trade war, the COVID-19 pandemic, soaring transportation costs and a global energy shortage have pushed many into crisis mode.

To maintain a competitive advantage in a challenging business environment marked by volatility, businesses are focusing on digitizing their supply chain networks. Digital transformation of the supply chain allows businesses to diversify sourcing capabilities with minimum risk and enhance supplier relations management (SRM). Businesses that effectively digitize their operational footprint will not only better traverse today’s supply chain crisis, they will also be better positioned to thrive far beyond the pandemic. 

Supplier Diversification

Supply chain diversification can help businesses skirt around delays and rising costs. Even prior to today’s pandemic-induced crisis, supply chains were being rerouted as businesses first faced rising labor costs in China and later found themselves caught in the crossfire of the U.S.-China trade war. At that time, businesses increasingly adopted a nomadic sourcing framework to help shift production and sourcing to the lowest cost and highest value geographies. When the pandemic took hold, this same nomadic sourcing framework proved helpful for maintaining operations and asserting supply chain agility. 

Two-thirds of buyers with global supply chains planned to engage suppliers in new regions this year, according to a second-quarter survey by supply chain audit company QIMA. However, major shifts in procurement do not and should not happen with the snap of a finger, as there is always the possibility of new risks emerging when a business onboards a supplier it has not worked with previously. Historical data from QIMA confirms that periods of high diversification are followed by increased quality, safety and ethical risks — which are costly to businesses in the long-term. 

Digital Inspections 

Effective digital solutions can help reduce risks and ease the pain points of diversification. For example, a digital inspection platform can increase pace, accuracy and ease by leveraging a tablet or other mobile device to upload reliable data on the field and issue standardized reports. A mobile device for frontline factory workers, synchronizing data in a cloud-based platform shared with the supply network, is mandatory amid travel restrictions and quarantines.

Digital solutions also help resolve some of the challenges businesses face when onboarding new suppliers or hiring new inspectors, especially those in unfamiliar geographies. Business can gain a full circle, real-time 360-degree view of where suppliers stack up in terms of production, quality, social, environmental and ethical compliance measures. 

A practical, long-term approach is key for ensuring a successful digital transformation journey. By taking a sustainable approach to innovation, businesses can assess each technology as it comes to market and determine if, why, when and how it makes sense for them to implement.

For most businesses, inspections are a solid starting point for supply chain digitization. Essentially, digital inspection processes strike the very core of operations and inform key decision-making, including identifying failure rates of individual factories and inspectors, defect rates of specific products at individual factories and country-by-country performance levels. From day one, a digital inspection platform pushes efficiencies, quality and ethics throughout the supply chain.  

The first step to digitization should be taking a pulse on the supply chain in its current state, identifying the risk profile that each supplier brings to the table. Once potential risks are attributed to suppliers (as well as their tier-2 suppliers and beyond), the digital transformation journey can then begin by identifying the best solutions for bridging gaps, eliminating bottlenecks and hedging additional risks that may emerge with current and future suppliers. 

By standardizing workflows and implementing checklists for inspections and audits, businesses can build trust with their suppliers and partners, including factories, raw materials suppliers and vendors. Digital platforms also support proactive, data-driven decision making, deploying corrective action using real-time communications and risk analysis. Explicitly, businesses can anticipate problems before they wreak havoc.

Network Communication 

When it comes to today’s supply chain crisis, many of the present issues were bubbling under the surface long before the first case of COVID-19 was ever reported. Notably, legacy supply chain strategies take a “comply or die” approach, managing factory suppliers through top-down, one-way communication. 

While legacy models were once designed to minimize costs, reduce inventories and maximize resources, paper-based processes today consume greater costs and overuse resources for repetitive tasks. Moreover, the reconciliation — the moment of truth for whether or not a supplier is meeting standards — occurs too far down in the supply chain lifecycle. When an issue is finally detected, it’s usually too late to rectify without additional expenses. More troubling, businesses still using pen and paper don’t have easy access to historical or real-time data that can help them drive continuous improvement among their suppliers. 

Supplier communication and quality were cited as a “serious issue” by 59% and 41% of respondents, respectively, to a recent survey by QIMA. However, compared to their counterparts, businesses with highly digitized supply chains cut concerns of supplier communications and quality in half.

Notwithstanding its immeasurable tragedies, the pandemic has presented profound teaching moments. When it comes to supply chain management, businesses have learned that they cannot succeed alone and must protect supplier relations. This rings especially true in the recovery and rebound period as shortages, volatile demand and uncertainty will keep supplier diversification at the top of the priority list. 

To evade the pressures of engaging new suppliers in unfamiliar geographies, SRM is perhaps the single most critical differentiator that will determine supply chain success or failure. In a landscape rife with supply chain risks, businesses should only rely on trusted partners. How do businesses identify those partners? By opening lines of communication and implementing smart risk analysis and score cards, businesses will be in a better position to forge relationships with trustworthy, high-performing suppliers.

Therefore, to successfully digitize the supply chain, businesses must bring their suppliers on board the digital transformation journey and unlock meaningful benefits for them too. For instance, a digital quality control program can be reinforced by innovative features such as integrated inspector apps, actionable insights, automation tools, configurable workflows, API integration and interactive reporting. To support supplier onboarding, many digital platforms also offer training courses on operational workflows and best practices.

Digitizing supply chain management fundamentally transforms and bolsters the synergy businesses have with their entire network. Relationships are no longer just governed by the standard client-vendor contract, but instead built on partnership and powered by teamwork. This type of collaborative framework empowers businesses to future-proof procurement processes and forge relationships with suppliers they can trust and grow with for years to come.

By mitigating risks and harnessing the power of symbiotic partnerships, businesses can gain control of their digital transformation journey to weather the supply chain storm and chart a new path forward toward resiliency — no matter what comes next.

Sébastien Breteau is founder and CEO of QIMA, a quality control and compliance service provider.