Business Platforms – BPO meets Technology: Multiply your supplier collaboration effort using Platform

I had an interesting comment in one of my blog entry that - we need to be cognizant of the fact that while supplier consolidation offer better negotiation power and control on supplies in addition of host of other benefits, there is another school of thought that drives de-risking of supplies by using more suppliers’. While there’s no one-size-fit-all approach while attempting supplier rationalization (read consolidation) in the present economic environment it is also important to have a rigorous supplier risk management plan in place while taking a decision on supplier rationalization. On one hand the idea of supplier rationalization is extremely effective in improving relationship with a focused supplier base and thus helping you in increasing your sourcing effectiveness, I have also seen instances where organization after consolidating its supply base continue the business-as-usual with the remaining suppliers attempts no improvement in collaboration, partnership or try to come out with a new road map and such supplier rationalization is certainly not good for organization’s health in the long term.

Organizations those truly leverage supplier rationalization as an opportunity to infuse strong collaboration with their suppliers through better communication, exchanging detailed forecast, sharing product design and resolution of financial crisis are bound to achieve sustainable business value in the long term. The suppliers because now they are getting much larger pie of the business would be more enthusiastic in sharing cost issues, potential savings, capacity information, supply chain concerns and other key information that will provide far greater visibility into your potential supply risks thus helping to address the usual dichotomy between supply rationalization and supply risk. This would enable them to have an early risk warning framework in place by proactively identifying any potential supply interruptions. To achieve this end state it is important to extend the procurement technology automation to extended supply base rather than taking a myopic view by automating internal source-to-pay process only. It is important that one should continuously watch and review if the underlying procurement technology is keeping pace with changing business need of external collaboration and thus not becoming a constraint in adapting to the extended collaboration need. Technology platform on a managed services model can help organization to accelerate external collaboration automation in a smooth way and thus ensure achieving seamless sharing of supply information. Having said that depending on the strategic nature of supply, one may still want to evaluate an alternate supply after taking into consideration its criticality and business impact. For example no level of collaboration can safeguard you from natural disaster, trade barriers or adverse geo-political events.