What You Don’t Know About Your Suppliers Can Hurt You

What You Don’t Know About Your Suppliers Can Hurt You

Most companies run credit checks to make sure their suppliers are stable. But how can executives keep up with the news and other crucial reports to see if those suppliers will keep their commitments?

Financial risks can be as fresh as today’s news. The Russian invasion of Ukraine, for example, placed additional stress on a supply chain already strained by the pandemic. The United States, the European Union, and other countries continue to place companies and people on the sanctions list for ties to Russia.

The war and sanctions have led to shortages of food, fuel, semiconductor chips, cars, and even tires. These shortages provide new incentives for companies to consider the following objectives when reviewing purchases in the supply chain:

  • Organize, track, and manage data, making decisions quickly and correctly.
  • Streamline procurement to complete everything quickly, accurately and sustainably.
  • Find and reduce issues and errors in real time before problems get bigger.
  • Innovate and sustain relevance ahead of the competition.

Handwritten ledgers and paper files will not meet those objectives and can no longer keep companies competitive. ICT (Information and Communication Technology) is vital for communication, visibility, and efficiency in supply chain purchases. Information must be available in real time. Technology can ensure every department in the company has essential information immediately so decisions can be flexible and fast.

Technology also helps companies consistently monitor, analyze and update data. A digital system also helps keep track of critical issues like Environmental, Social and Governance (ESG) risks, ISO standards, workforce and subcontractor management.

Tips for Technology in Purchasing

These five tips can help you use technology better when making purchases:

1. Align all stakeholders to an action plan. A plan incorporating a digital approach makes the adaptation process more unified and simplifies management.

2. Choose a cloud-based format. Many traditional companies have adopted an online approach. A cloud-based program is cheaper, more secure and less prone to errors. The barriers to the changeover are low, but the rewards are high for what it will save in time and costs, flexibility, scalability, loss prevention and security.

3. Automate sourcing. Technology makes it possible for better purchasing decisions and collaboration between IT, finance, legal and other departments.

Cloud-based tools help you source suppliers by looking at their financial risk, sanctions, safety records, and sustainability standings. Having the best data available helps create a better purchasing strategy. Your company can also use the platform to qualify suppliers for your specific requirements.

4. Leverage analytics for insights. You can improve processes, clarify goals, manage reports and reduce costs by using digital analytics.

5. Choose a user-friendly platform. Your online platform should offer seamless integration and great customer support. It should help you keep track of a company’s financial health, legal proceedings, criminal investigations, sanctions, and negative press. The system should also adapt as your needs change.

Executives can no longer simply rely on credit reports to have peace of mind about the stability and reliability of their suppliers. You need technology to keep up with the millions of factors that can put your suppliers and company at risk.