Every day, managers responsible for procurement processes and supplier management face important decisions, which are made more difficult by the risks and uncertainty that have increased in recent years. The era of turbulence that began in the 21st century is characterized by strong dynamics of change in the supply chain environment, which are generally highly volatile and often have a significant impact on company performance. In conditions of market instability, companies are increasingly interested in building flexible supply chains that have the ability to effectively respond to unpredictable changes in supply, demand, and products, as well as to so-called business events. At the same time, companies declare that the key to this success is responsive suppliers.
An analysis of the subject literature conducted by the author indicates that in current conditions, the right direction for improvement is not only a focus on ensuring flexibility but also the ability to adapt. The article points to three features of supplier relationships that are resistant to disruptions. These are: purchasing flexibility, adaptability of the purchasing process, and supplier flexibility. The purpose of the article is to introduce this issue, as well as to point out good practices regarding cooperation between a manufacturing enterprise and first-tier suppliers.
Factors determining the building of flexible and adaptive supplier relationships
There are many factors that cause managers to focus on improving supplier relationships in the face of increasing environmental instability. Among them are supply chain factors and supply chain environment (external) factors. The source of the former is both the enterprise (focal company) and its upstream and downstream supply chains. In turn, the source of the second type of factors is primarily the macro-environment, which can be identified according to PESTLE analysis.
Supply chain factors concern the supplier-buyer relationship, as well as supply chain attributes, which include the product, demand, and the production environment. International supply chains for non-standard products, products with a short life cycle, products for which demand is difficult to predict, as well as products made to order, have to deal with the greatest environmental uncertainty. The volatility of independent demand hinders not only the planning of production processes but also the planning of procurement.
Reliable deliveries are a critical input element for manufacturing processes. They affect the continuity of production processes and the timely fulfillment of orders, thereby enabling the maintenance of a high level of customer service. This is crucial, especially when implementing JIT strategies. It happens that company actions (for example, promotional activities) are the cause of an increase in demand for which the purchasing department (and thus suppliers) was not previously prepared. In such situations, there is a destabilization of value-added processes and a decrease in the level of customer service. The purchasing process requires reliable qualitative and quantitative data, the source of which is the market, as well as forecasting and planning processes carried out in the company and in relationships with suppliers and customers. Therefore, the integration of the goals of individual departments in the enterprise (including purchasing, finance, marketing, production), as well as the pursuit of achieving higher levels of supply chain management maturity, is so important for ensuring supply chain flexibility.
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Source: Logistyka Magazine