Procurement plays a big role in the success of SME, as quite often they struggle to find the right sources for quality parts, components, and services. Since SMEs usually plug into the supply chain of large players, they can get severely penalized for frequent disruptions in meeting their delivery obligations. The ‘big daddies’ respond with suspensions, payment holds and even blacklisting their SME suppliers for what is mainly a systemic problem in India. If you are one such supplier, what should you do to avoid making your customer unhappy?
At the heart of the issue is the loosely structured style of dealing with your own suppliers. The entire chain of events from identifying a prospective supplier, to the start of formal sourcing from them, needs a lot of rigour and discipline at your end.
Item specifications must always be available in good detail, especially in the case of engineering items. Technical and functional specifications and standards, substitutes or alternate items, units of measurement, min-max-reorder levels, storage requirements etc. play a vital role in ensuring their successful procurement. The mutual dependencies among items inside Bill of Material (BoM) structures should be clearly understood and documented for correct material planning and sourcing strategies. Enough pictures and diagrams should always be available with every item record. Information about safe handling and storage can be used to avoid injuries to people who handle them and for ensuring their usability within its specified lifetime. Physical dimensions, volume and weight details, standard packaging specifications such as palletization, containers etc. are essential for storage space planning.
A healthy list of qualified suppliers is the backbone of any business. It is no easy as it sounds to have it, though. It needs years of deliberate, patient effort to build one. You must know enough about every supplier to treat them as a business partner and nurture them. Relationship managers should be mindful of the dynamics in each others’ business. The quality and timeliness of deliveries should be constantly monitored, and suitable feedback passed on. Supply bottlenecks should be sorted out together before they start crippling your business. Suppliers are ideally placed to share useful information about market conditions. Plan for substitutes or even discontinuation of a particular product in advance to protect your reputation. Churn your supplier list regularly every few years to protect the business from heavy dependency on certain suppliers. Frequent delays or defaults in payments to suppliers often cause friction in mutual relationships.
Well, we have barely scratched the surface…At the heart of a healthy procurement system is a good ERP, that can take care of all of these aspects. A structured and streamlined process management system lets you achieve most of the objectives of business, apart from helping you manage procurement well. Let a business not suffer for want of information, rather than market factors. Give your staff the right tools and technologies to keep the business humming. Consider your job done when you start using a cloud ERP that can be accessed anytime, anywhere.
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