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May 2020

supplier and buyer teamwork

A Day in the Life of a Supplier

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The recent COVID-19 pandemic has shined a light on getting back to the fundamentals within the supply chain. It’s really all about agility and alignment with evolving customer demands. Now, more than ever, it’s crucial for suppliers to have the ability to respond quickly with unexpected changes in demand. There may be spikes for certain types of products and shortages with others, just as we have seen firsthand during the COVID-19 crisis.

For instance, fear-based buying left most grocery stores with continuously empty shelves. Then, these stores started limiting the amounts customers could buy on specific products to alleviate the rapid shifts in purchasing habits.

Not to mention, since restaurants had to close, consumers spent more of their time and budget preparing meals at home. As a result, suppliers had to demonstrate their ability to offer varying products quickly and accelerate the speed of shipments even while many workers were choosing to stay at home.

Then, there is the flexibility factor. As everyone sheltered-in-place, grocers were no longer battling it out for the top spot in the grocery delivery business. Consumers quickly transitioned to shopping for their groceries online rather than battling it out in crowded stores with long lines. In real time, grocers – and suppliers – had to change their business models to meet this rising demand.

As you can see, suppliers certainly have their hands full and this will continue to be the case in the foreseeable future. So what does a day in the life of a supplier look like? Keep reading to learn more.

Wear multiple hats

A supplier may be involved with the planning and management of manufacturing processes. If so, this requires a jack-of-all-trades perspective since suppliers must also be involved in marketing, prospecting, sales, negotiations, accounting, shipping, and more. Invariably, this can be tricky during a pandemic.

To illustrate, the right goods must be produced efficiently, at the quality expected, and at the right price, then shipped/distributed expeditiously. Not to mention, a supplier’s clients may have evolving needs as well. Profitability can only be attained when productivity, and efficiency, are achieved in all of the above areas.

Provide quality products

Suppliers must ensure that their products meet the standard their customers expect. Not only does this help to retain their relationships, but also helps with referrals, reviews, and word of mouth. If a supplier offers multiple products, then the job becomes even more complex.

And quality isn’t just about the end product, it starts with the production engineers as well as the planners, controllers, and supervisors who ensure quality controls are all met before final output.

A typical day

Naturally, the scope of work will depend on the product/products being offered and/or produced. To start, there may be a walk around the manufacturing plan and production areas to ensure everything is in working order. If not, the right protocols are in place to fix any issues. Pay reports may be reviewed along with sales reports.

Next, the incoming orders will be checked along with their production and distribution progress. Details such as date, quantities, time, status, and more may be cross-checked against production.

After looking at incoming orders, a production meeting may be held with all necessary team members to discuss the work for the day and to draw up a production schedule. Some of the key talking points will be around deliveries, stock, revenue, quality control, and customer service.

Once a production meeting is satisfactorily adjourned, it’s time to look at inventory and any quality issues. In between all of these activities there may be client meetings, fielding phone calls, and responding to team member inquiries. Plus, there may be training for new team members and ongoing training for everyone else.

Moreover, another walkaround may ensue. Depending on the status of production, there may be fluctuations in the urgency of customer requests – especially in the event of a pandemic. So then, delivery performance reports will also be looked at very closely. Transportation routes may be optimized Suppliers always have to be prepared to address multiple projects at one time.

Marketing

Getting noticed is one of the hardest things for many businesses, including suppliers. Often, suppliers have to go well out of their way, with many potential clients asking them to register on specific vendor/supplier portals.

Once you’re in the portal, the potential client can see all of your details. There are potential customers who won’t even consider suppliers if they aren’t registered. Even if a purchasing agent wants to work with you, the head office may only allow payments to registered suppliers.

Unfortunately, registering in a portal doesn’t guarantee that potential customers will work with you. Registration is often a necessary but not sufficient requirement. Entering all of your information into a portal takes time and if you don’t hear back, it can feel like a waste of time. For this reason, some consider client-specific portals to be a black hole.

Yet to get on a single portal you may have to fill out a thorough application. In some cases, before you’re accepted you must also undergo an inspection or evaluation. Inspectors may want to examine personnel, your facilities and equipment, quality assurance measures, production, and more. And no matter how hard you work, there’s no guarantee you’ll pass.

Given that there are over 2,000 supplier portals in the United States and 3,000 globally, it’s easy to see why so many suppliers are jaded. Registering for each portal would consume a lot of labor hours. Meanwhile, companies are trying to manage social media, run adds, produce content, and drum up leads.

In terms of other marketing tactics, many suppliers send staff to trade shows and conferences. Other staff members are on the phone, cold calling leads, following up with potential customers, or trying to pin down a specific customer’s needs. And all of these campaigns generate data, which someone has to analyze. In other words, a company may lack the manpower to register in each portal.

Of course, even resource-strapped companies may try to register for portals. The question then is which portals to register for? With thousands of options, it’s smart to prioritize the ones that will lead to the most leads. There’s no easy answer. A popular portal may seem to offer the most leads but competition is high. A lesser-known portal may offer fewer leads, but also competition.

While portals present challenges, they also present opportunities for suppliers, and ease for companies looking for suppliers. A portal makes it easier for the hiring company to find and verify the right supplier. Some companies prioritize certain suppliers, such as local companies or diverse suppliers. By setting up a portal specifically for these suppliers, companies can find exactly who and what they need.

Portals may also make it easier to manage relationships. These days, suppliers, buyers, and internal users may all collaborate and interact. The right portal empowers these relationships and allows for more optimized delivery of products and services. Increasingly, systems are automated as well, sending notifications, executing calculations, and more. As such, getting noticed as a new or small supplier can feel like a full-time job.

Take away: Collaborate and learn

Another aspect of a day in the life of a supplier is finding other suppliers who can serve as partners so that everyone can be more resilient and better prepared when a crisis hits. It’s always important to collaborate with other suppliers who can share relevant knowledge and products to make up for any potential shortages. Out of the many hard lessons learned from COVID-19, the most vital ones are that agility, flexibility, and efficiency are the keys to survival.

 

Organized Contract Management

5 Reasons You Need a Real Contract Management System

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Are you still using Sharepoint or similar software for contract management? You may be putting your business at risk and losing a lot of time and credibility in the process. A real contract management system not only boosts efficiency and reduces liability, it makes everything so much easier. It’s like sending your contracts on a vacation with a day-spa—the whole supply chain process is going to be a lot more zen. 

If I give you fifty random contracts to find… how fast can you find them?

If you’re not using a robust contract management system, the answer to that question could be days, weeks, or worse—maybe you couldn’t find all of them. If that last part applies to your business, you’re not alone.

When we have had clients come to us for help with contract management, we’ve asked them this exact question. One client (we’re not naming names! There’s no shame in fixing a broken system.), they could only find sixteen out of fifty contracts over the course of three full days searching.  Yikes. Talk about a costly timesink, especially when you think of this inefficient process accumulating over years of business. 

“When am I honestly going to need to find fifty random contracts?” some ask. Let’s talk about when and why this matters to your business. 

  • You need to cancel a contract. You are not sure about the start or end dates.
  • You have suppliers for duplicate or similar products.
  • Your company gets involved in litigation regarding a supplier, perhaps due to faulty products that caused harm to your customers.  
  • Your line of business is in the healthcare industry. Not being able to pass this test effectively could jeopardize your business’s accreditation.

With proper contract management, this task should be as easy as searching Google. A few quick taps of the keyboard, and there are your contracts. Easy peasy, and so much less stress when a situation is already wearing on your nerves, such as in the case of a lawsuit. It’s one less thing for you to worry about, and can save massive amounts of time, money, and Tylenol over years of running a business. 

Are all of them signed by both parties? 

A contract that isn’t signed by both parties is no contract at all—it’s as enforceable as a scribbled-on burrito wrapper. Especially when you’re dealing with lots of different contractors who renew at different times of the year, it can be difficult to track who has signed what and sent it back without a good system supporting you. 

Carrying contracts that aren’t signed by both parties is a huge risk to your business.  We’re talking sub-par harmful products with no recourse, errors and ommissions insurance nightmares, unfortunate liabilities in the case of catastrophe. It can be legal chaos to find out, in a desperate moment for your business, that a contract was never signed, thus there’s nothing you can do. There was never an agreement at all, for most purposes. 

A successful contract management system will ensure everyone you do business with has signed all necessary documents, so you’re never caught with your pants down. This brings us to our next point…

Do you use electronic signatures?

A startling number of businesses are still managing contracts like they were dropped in a cubicle in the early 90s. Faxing? It needs to be a thing of the past. And let’s toss out pen signatures too while we’re at it.

Let’s be honest, do you think your business would basically implode if we dropped your fax out the window? 

Well, let’s have a lesson in gravity, because putting so much stock in an outdated, inefficient method of transmission is costing your business a lot of time and money as well as putting your business at risk. 

Electronic signatures through applications like DocuSign are a reliable method of signing contracts in a way that boosts efficiency for you and your contractor while also resolving the issue of carrying contracts signed by only one party. 

With e-signatures, contractors are shown step by step which places require signatures and initials throughout a contract, so there are no more missed steps. Aside from the fact that it is straightforward, nearly instant, and auditable, they also help in another way—reminders. Have you been waiting for two weeks on a signature? Let the platform automatically remind your client. It’s one less thing to pay your employees to manage and is likely to get that contract back signed faster than older methods. Plus, it’s easy to organize contracts that are already digitized. Bye, bye scanner. Enjoy the company of the fax machine. 

Do you have a report that shows when all of your contracts expire?  

Is it time to renew your contracts? Right now? Last week? If you’re like most businesses without a CMS, you have no idea. 

Knowing when your contracts expire lets you be a step ahead. Unhappy with a supplier? You’ll probably need some time to search for a new one before you drop the old one. That means research, comparisons, time, and ultimately money. It’s not something you want to have to rush through. 

A real contract management system will let you know which contracts expire 30 / 60 / 90 days in advance, so you have plenty of time to determine your most advantageous next move. 

Can you quickly and easily keyword search?

Do you need to know which contractors you have supplying bed linens? Toilet paper? Are you among the buyers in the Great Glitter Conspiracy*? With a proper contract management system, you just need to do a simple text search to find exactly what you’re looking for.

Don’t settle for anything less than user-friendly, data-driven contract management that keeps you ahead of the curve instead of rustling papers and unjamming the fac machine way, way behind it. 

About Premikati

Premikati is a woman-owned business of procurement experts providing best-in-class software to maximize your company’s ROI.  

Our award-winning team has a 100% success rate implementing on-time and on-budget, due to our agility, leanness, operational experience, and the ability to tailor the transformation process from C-level to end user. (For more information, visit www.premikati.com)

 

*Spoiler alert: After much deliberating and searching among hordes of Redditors, the answer has been found.  It’s the boating industry. Boat paint uses glitter. However, the intense secrecy surrounding glitter production and the surprising technological complexity of glitter creation makes it worth a look for the curious at heart. 

 

Procure to Pay Premikati

A Day in the Life in the Procure to Pay Cycle

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Even with advanced solutions available, many businesses still try to make do with their legacy systems – and manual tools –  when managing their procure-to pay process. Even if work is getting done, it is often prone to error, redundant, inefficient, and slow.

It’s really just a matter of time before countless issues arise and cause damage to a company’s procurement strategy, especially in light of the COVID-19 pandemic where companies need to be agile most of all.

So what does the procure-to-pay process entail? The procure-to-pay workflow is a coordinated set of actions based on the objective of acquiring goods and services at a reasonable cost and in a timely fashion. It begins with need identification and moves on to invoicing and payments. There are several steps, and they need to be executed in order.

Invariably, the procure-to-pay process is one component of supply chain management. Once the required goods or services are obtained, the supply chain department will make sure these goods or services reach the right destinations. Of course, a day in the life is never ordinary. Keep reading to learn more.

Market analysis

Most people will research a company’s goods or services before making a purchase. The same is true for the procurement-to-pay process. The initial step is to perform a market analysis. The goal is to get the best deal possible. In addition, the company’s budget is met.

Often, a procurement manager will look at how a fluctuating market may affect prices. Further, they will also review prices from a list of suppliers. After the comparisons, the procurement manager may send a request for quotation (RFQ) to help make the final decision.

Compliance checks

In the digital era, compliance is one of many areas a company must adhere to based on their industry and location. There are federal, state, local, and global regulations to follow. As a result, the procurement manager must ensure all contracts are in compliance with legal mandates. Moreover, the procurement manager must remain apprised of any legislation updates and revise company policies around procurement-to-pay when needed.

Compare the suppliers

Each supplier has their pros and cons. What’s most important is working with a supplier/s who can meet a majority of the company’s needs. A supplier usually isn’t signed on to a contract without a careful review. Plus, the supplier must demonstrate they can deliver the necessary goods and services as needed and that they are of the desired quality.

Get team members on the same page

Planning out schedules for employees is part of the process with the intent of meeting deadlines. Not to mention, any issues with goods or services need to be addressed immediately. Sometimes this means holding weekly, or daily, meetings to get the team and suppliers on the same page.

Determine the need

For starters, the initial step is to figure out a valid need and the associated business requirements. Then, the procurement team starts work on the terms of reference (TOR) and statements of work (SOW).

Create a formal purchase requisition

Once the TOR and SOW are completed, then the procurement team will fill out and submit the requisition form. The form can vary in procurement whether it be for consignments, purchases, or something else.

Obtain requisition approval

The procurement manager usually approves or rejects a purchase requisition based on whether it meets the need and budgetary guidelines. Not to mention, incomplete requisitions are automatically rejected. This is about focusing on best practices to ensure the company saves money without sacrificing on quality.

Complete a purchase order

The purchase order will be based on a negotiation around payment terms, price, and delivery time. A spot buy may also be executed for unique purchases or unmanaged category buys. The purchase orders will also come from the purchase requisitions.

Obtain another approval

As you can see, there are many approval procedures to go through during the procure-to-pay process. The purchase orders are reviewed for accuracy and legitimacy. Suppliers also have the option to reject, approve, or renegotiate. Usually, POs are sent electronically – they can be entered right into the supplier’s PO system. And once a PO is approved, then a legal contract ensues.

Apply a goods receipt

Now is the time to take stock of the goods or services. Were they delivered on schedule? Are they of the quality promised by the supplier? Do they comply with the contract? There may be other policies in place before creating the goods receipt. Additionally, the goods receipt can be rejected and the process restarts.

Rate the supplier

It is crucial to have reliable suppliers. Based on the goods receipt, performance can be assessed. Again, the procurement team will look for quality, budget, compliance, timely delivery, and several other factors. Any negative ratings will be stored for future reference.

Approve the invoice

Once a goods receipt is approved, a three-way match between the purchase order, the vendor invoice, and the goods receipt is performed. If there are no discrepancies found, the invoice is approved and forwarded to the finance team for payment disbursement. The goods or services are matched against the line items published on the invoice. In the case of inaccuracies, the invoice is rejected back to the vendor with a reason for rejection.

Send the payment

Once the invoice is approved, it is submitted to the accounting/finance department for approval. Payments are then sent based on the terms of the agreed-upon contract. Unquestionably, the payments will be made as one of these types: Final, advance, partial, installment, holdback. Other stipulations accounted for may occur, for instance, when a supplier offers a discount for payments made 10 days after a goods receipt.

Weekly or monthly responsibilities

Outside of the strict procure-to-pay workflow, procurement managers will consistently review purchase orders and potential suppliers for other needs. In fact, needs can evolve and demands will change – as we have seen directly during the COVID-19 crisis. Bid awards will also be created, subject to final approval. Sometimes, procurement managers may also handle the responsibility of creating bid specifications.

Analyze spend

Again, the procurement-to-pay workflow was designed to get the most cost-effective goods and services possible with the required quality. Therefore, the procurement manager will continuously monitor spend – searching for any potential areas of concern such as a supplier changing or raising their pricing structure. Keeping an eye on all purchases helps to conserve resources while meeting the company’s budget initiatives.

Final thought

As you can see, the procure-to-pay process requires a strict adherence to specific actions, guidelines, and regulations. The workflow is ripe for incremental improvement as the world becomes more digitized.

To ensure value development, and success in a post-pandemic world, innovative companies are transitioning to Procure-to-Pay software as a means for addressing inefficiencies and creating an agile environment. Are you ready to streamline your entire procurement-to-pay process? Experience the Premikati difference. Schedule your free demo today.

Ariba Snap procurement

Procurement Lessons in the Midst of a Pandemic

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As the COVID-19 pandemic spread throughout the world, supply chains and procurement saw their traditional modeling around price negotiations, contract compliance, and cost control become overwhelmed with unprecedented challenges. Through this time, Premikati has learned that managing risk is paramount.

Suddenly, supply chains and procurement have been disrupted in ways we have not seen in our lifetimes. Many large and small entities had to immediately reconfigure their manufacturing, and procurement, to producing, distributing, and meeting the most essential healthcare supplies and foods to ensure populations are safe and healthy.

All of these actions required identifying new suppliers, vetting them, and ensuring enough liquidity to purchase necessary goods at scale. Further, unused inventory needed to be addressed as well.

Invariably, experts from every field prognosticate on how COVID-19 has changed our lives – and our economies – forever. The many blanket, and even extreme, disruptions to our work lives only serves to convey that we are still all playing a role in this huge experiment where technology has led the transition from traditional office environments to remote working and virtual happy hours. Is the future here, right now?

At Premikati, we don’t have any exact predictions around how this pandemic will impact procurement processes over the long term. What we do see is an opportunity to determine how digitization and new platforms can help companies gain a competitive edge once we reach the other side – and, we will.

Naturally, we all hope the pandemic will end soon and life will return to normal – as it has in previous disaster scenarios. Yet, it appears that many facets of our economy will never return to the pre-pandemic version of normal.

At this point, technology can help solve many of the issues which the pandemic has brought to the forefront. It’s time to change the mindset and work in a more collaborative and strategic way.

History in the making

For the first time in modern procurement, and supply chain history, a pandemic created a global impact on supply, demand, and the available workforce simultaneously. In order to revive the supply chain, and get things back to efficient processes, we view automation as a critical aspect.

In light of the global cracks in the supply chain, automation can help to increase productivity at home and with alternative suppliers who are located much closer to the communities they serve. In fact, with automation, many processes can be successfully executed domestically while creating new job opportunities for tech-savvy employees.

We also consider how important data will be not just now, but for the future of work. For procurement, greater connectivity demands an acceleration in digitization across the board and a utilization of collaboration tools, industrial IoT, and AI-driven insights to improve agility, capacity, predictability, and availability.

What does the future hold for procurement?

At Premikati, we truly believe that companies who invest in strategic technologies will come out of these perilous times with a competitive and profitable edge. Not to mention, your in-house team can ultimately become much more productive.

The COVID-19 pandemic has been a wake-up call for procurement in terms of addressing supply chain risk and business continuity. Perhaps it’s time for full-scale deployment of connected intelligence.

Yet, sourcing is just one side of the issue. Companies should also understand the supplier side. When you can comprehend the issues affecting your suppliers, then you can more efficiently ward off potential issues in the future. Some of the most critical components for the supplier side include:

  • Tier 1 supplier risk
  • Ensuring an alternative supply network
  • Efficient workforce planning
  • Bolstering the supply chain
  • Improved planning
  • Business continuity amidst plant closures
  • Production flexibility
  • Capacity security
  • Global planning

Think about your non-negotiables: Customers, employees, products, services, lines of business, and more. Which of these are the most critical for business preservation?

Without adequate plans in place, many businesses went towards overadjusting where they would increase inventory across the board – just as consumers were doing the same hoarding toilet tissue, masks, disinfectants, canned goods, soaps, and hand sanitizers. Nonetheless, overadjusting can come with consequences such as excessive inventory during a time when consumers have cut back on spending.

Disruptions have occurred upstream and downstream. The most successful companies will work on improving visibility, agility, and responsiveness using strategic analytics. As a result, you can determine how you can mitigate the risks and begin recovery quickly.

At Premikati, we realize that every company is at a different stage in terms of dealing with the impacts of the pandemic. Not to mention, problems can vary depending on region. We want to offer guidance on where to find opportunities in the midst of unprecedented challenges. Quick action is essential right now.

Premikati can help your organization control the narrative and the outcome, complete with a thriving environment. Working through this crisis, we are prepared with new business models created to define the future of work in procurement and for supply chains.

Final thought

The organizations with the highest likelihood of weathering this storm are those who have achieved the optimal balance between short-and-long-term strategies. During a crisis, the most common mindset is the short-term one. On the other hand, being forced to operate differently has helped many businesses see what they can do and also, what they need to do.

More than just adapting to the current environment, become a market shaper and take part in the reinvention.

Premikati hopes that by sharing what we’ve learned about this pandemic, that we can help strengthen your procurement processes. Our solutions are focused on accelerated efficiency, resiliency, mitigation, scalability, and flexibility. We are all facing this together, so let’s collaborate.

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