The Ultimate Buyer's Guide for Purchasing trendy store supply chain

Eyes and ears are the best tools a supply chain professional can use to manage and improve supplier performance.

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Through a site visit, a buyer can determine if a new or existing supplier has the necessary leadership, organizational structure and operational process controls in place to meet the company's material and service requirements.

Regular visits are the best method to help existing suppliers improve their performance by establishing and enhancing multiple lines of communication, allowing for technical and manufacturing support, conducting contract reviews and offering supplier development opportunities to further enhance performance.

Site visits often follow a detailed audit framework. Yet the less formal elements of a supplier visit can provide significant insights into the supplier, ones that can only be found by being up-close and personal.

Turning into the industrial park, the supplier's facility looms ahead. Let's start our visit.

Outside the facility

• Drive around the building and look at the grounds. Is trash overflowing? Does the supplier recycle? Are the grounds clean and well maintained? These can indicate whether the supplier is a good neighbor. How is the parking organized? The outside of the facility can give you an indication of how the inside is organized, including the level of pride the organization has in its business.
• Review the welcome board. If your own name, the names of others or the name of your organization are spelled incorrectly, that may be an indication of company-wide poor process controls. A good test is to see how long it takes to be corrected after you identify the error. How are you welcomed? This is often a signal of the importance of your visit and your business.

In the conference room

• Use the visit as an opportunity to stress the performance objectives of your organization. Reinforce your need for zero defect quality, 100% on-time delivery performance, cost management and other important initiatives. Provide an update on your business and ask for one on the supplier's. Market intelligence is critical to sales and operations planning for both companies.
• But don't linger here. Head to the manufacturing areas as quickly as possible. Resist the management slide shows. Look at the operation firsthand. That's why you've made the trip.

At the manufacturing site

• Examine calibration stickers on test equipment. They should be visible and current. If the calibration is out of date the operation of the test equipment may be suspect. The functional tests that utilize the equipment may be invalid.
• Observe cleanliness and organization, especially in the manufacturing area. Is the inventory secure? Are the employees working in safe conditions? Do you feel safe? Have you been offered head, eye and ear protection?
• Review quality charts and postings. Many companies are proud of their performance. Let them brag a bit.
• Ask the supplier to "book, make and ship" you. That is, show you the entire process of entering a sales order, establishing the work order, purchasing and kitting the materials, building and testing the product, and packaging and shipping. Review documentation, process controls and paper flow. You might also want to follow one of your own existing orders through the system.

Throughout the visit

• Speak with lots of employees. Employees who work in an empowering environment often look forward to the opportunity to chat with customers. Ask permission to engage the employees in conversation and allow them to tell you about their work. Ask them what makes their organization special. For an existing supplier, thank them for the work that they do on your behalf. Make it personal. You are more than a customer number, and employees will remember a handshake and smile fondly.
• Speak with the purchasing department personnel and gain insight into their supply management process. Identify areas of risk and identification of critical path suppliers, your tier 2 suppliers. Discuss opportunities to work together to lessen the risk.
• Check out the employee break areas and restrooms. Their condition reflects how a company values its employees.

On your way out

• Debrief the members of the visiting team and document your visit. Send a written, not digital, thank you note to company management to share with their workers. Be a good customer, one the supplier is proud to have.

On-site visits show you are serious about the supplier's performance. Few companies make the financial and time commitment to regularly visit existing suppliers and investigate new ones. Those that incorporate onsite supplier selection and performance monitoring stand out in a crowd of other demanding customers.

Site visits to suppliers can be expensive in travel costs and time away from the office. Senior management may resist travel approval because of budget constraints and unfamiliarity with the importance of the visit. If this is the case, supply managers need to utilize their value analysis tools to convince management to authorize the trip.

In fact, supplier visits are often cost reduction opportunities. A visit to a new supplier allows for an almost instant qualification, lowering the early stage hurdles that appear in any new business relationship. If the supplier has a clear understanding of the business and technical requirements early in the relationship, ramp-ups can be smoother and less costly.

Visiting poor performing suppliers can help them get back on track. On-site visits can identify technical, manufacturing and administrative gaps that need to be solved. This would reduce costly material shortages, quality related rejections and order processing and tracking issues.

Visits to well-performing suppliers keep the momentum going and reinforce the positive relationship. They are also a good opportunity to identify and address potential risk issues and discuss additional business opportunities.

This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.

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There are several types of SCM solutions, built for different types of buyers. It's important to assess which type you need to fit your organization's needs:

Best-of-breed: These programs are made to perfectly address one particular aspect of supply chain management. As the name implies, they are often the best option for such functions because they are so specialized. The downside is that organizations need to ensure they can share data with partners' systems and within their own organization. For example, a tailored inventory management system with state-of-the-art automation would reduce warehouse worker inefficiency. 

Integrated SCM suites: These collections of tools are meant to track and optimize the product's journey from raw material procurement to end consumer delivery. Tightly integrated supply chains can benefit from these suites because they allow suppliers with different needs to share information for use in different functions. Logistics is combined with inventory and warehouse management, along with project management, product development, and even a Point of Sale (POS) system in the retail shop where the product is sold. These are often sold as an all-in-one solution, but can sometimes be licensed a la carte. 

Enterprise Resource Planning (ERP): This class of system goes beyond the supply chain to join data and functionality with other parts of a major corporate business, such as HR, business intelligence (BI), accounting, customer relationship management (CRM), and more. As the name implies, this type of solution is intended for the enterprise, and requires significant investment. (For an idea of the scale, this is the type of system that Procter & Gamble uses.) 

Even though we refer to supply chain management as a 'field,' it is really a collection of similar practices that can be applied in different ways, depending on the industry. Here are some of the different needs that SCM software can address, based on industry:

Automotive: Most car manufacturers are expected to produce a large number of floor models and also support build-to-order for customers buying brand new. To accomplish this, it's imperative to manage inventory at dealerships and distribution centers while tying in ecommerce systems to locate already-built cars that match customer specifications.

Chemicals & pharmaceuticals: With specialized needs, certifications, and extra oversight, pharmaceutical organizations require integrated SCM systems that allow the right people to access data at the right time. Transportation of chemicals can be especially dangerous, making logistics for clear routes and careful storage all the more important for this industry.

Consumer goods: Organizations working in consumer goods need to focus on demand forecasting, because everything depends on the end buyer. Finding ways to cut costs in the supply chain and pass those savings on to retail and ecommerce stores makes your product more likely to continue being replenished.

Durable goods & furniture: Due to the physical size of these products, furniture and durable goods need to have limited warehouse time. In high-end, made-to-order furniture supply chains, tight integration of systems help reduce luxury buyers' wait time from order to fulfillment. 

Electronics & high tech: SCM software with strong levels of security for proprietary information is vital for this sector. Being able to tie in designers, developers, manufacturers, and procurement helps keep high-tech products on time for delivery to customers.  

Food & beverage: F&B transportation and storage needs tend to have more stringent requirements (for purposes of food safety and handling). Early detection of problems at farms near the beginning of the supply chain helps prevent costly recalls and PR disasters for major food corporations at the other end.

Grocery: Grocery store shelf-life is a precarious business: forecasting consumer demand and stocking accordingly can be the difference between profit and significant loss in this slim-margin business.

Healthcare: Getting equipment and transplants to the right hospitals at the right time makes all the difference for many patients. Healthcare professionals must look for SCM systems with proper inventory management, and that support open communication between extremely busy specialists.

Life sciences: Scientists working in biology and adjacent fields have living beings as 'products,' and highly sensitive organisms to manage. When your 'inventory' has to eat, breathe, and sleep, timing of their sustenance and other concerns require significant coordination in SCM tools.

Manufacturing: For suppliers near the start of a given supply chain, vital activities include forecasting buyer demand and handling purchase orders quickly. There are only so many facilities a manufacturer can use, and if they have multiple customers, keeping those production runs separate - but close and concurrent - helps the manufacturer realize profits.

Retail: Whether they're a department store with many different suppliers or a boutique that owns their supply chain, retail stores have a great need for SCM software. It must share data with POS and CRM systems to anticipate future demand, manage returns, and account for shifts in the ever-changing and competitive B2C landscape.

Service & aftermarket parts: This is one of the harder chains to manage because it's often moving in reverse of all others. Aftermarket parts, especially for cars, require a broad product portfolio, likely spread across distribution centers around the country. An SCM tool needs to track stock and products beyond the point of sale to when it reenters the chain, gets refurbished, and is available for service or resale.

Softgoods & apparel: Softgoods have similar concerns as consumer products, but also face more scrutiny regarding the ethics of their supply chains. They can use SCM tools to analyze and strategically select vendors to keep costs down, while still providing the quality and marketable sourcing that is so important to end buyers.

Wholesale: For suppliers in the middle who neither create nor sell to consumer demand, they use SCM software to run a tight ship and keep perfect levels of inventory at the core of their business. 

Tyler Riddell, Director of Marketing for eSUB Construction Software says:

'When trying to find the right SCM software for your business, it's important to keep a few things in mind. Below are the top three factors that should weigh-in when choosing a software

Industry Needs and Demands: Some companies have a unique supply chain that needs to be addressed.

Data Migration: Is the SCM software compatible with your current setup?

Contact us to discuss your requirements of trendy store supply chain. Our experienced sales team can help you identify the options that best suit your needs.

Reliable Vendor: Stick with a vendor with a proven track record.'

Lisa Hedges, Market Researcher for SCM system consultancy Software Advice comments:

'There is a vast disparity in functionality between different SCM solutions, which can make the buying experience somewhat frustrating. While some tools will focus primarily on business intelligence, others can incorporate a full suite of applications such as inventory control or transportation management. 

To find the right solution, the first question you should answer is what type of buyer you are. Companies that primarily focus on third party logistics will often require a robust solution which can handle a lot tracking, order fulfillments, and customer profiling. Meanwhile, manufacturers should look for features such as strategic sourcing, collaboration, and demand planning. 
 
Retailers looking for SCM software will likely need solutions that focus on warehousing, transportation, and inventory control. Another large group of buyers is distributors, who might tend to focus on tools that offer inventory and transportation capabilities. 
 
It's also important to understand some of the trends happening in the SCM market. Cloud-based software solutions have been widely implemented across most industries in other markets. While SCM providers have been a little slow to adopt this trend, technological improvements are making this a viable option in the future. 
 
Companies are also looking for more solutions that adopt business intelligence features. They want to know exactly where the money is going in their company. With this in mind, SCM providers are looking to incorporate tools that have BI capabilities.'

Organizations that merit a SCM system are usually large scale operations; therefore, adopting a system is a sizeable investment and the decision will be made by executives. Use the following guide for gaining sign-off from each executive typically involved:

Chief Executive Officer (CEO)

This executive is concerned with the overall direction of the company, how it competes with its rivals, and how new plans affect all other ongoing plans. In short, they want to know the big picture. Sell them a vision of a maturing supply chain with less waste, faster delivery time, and significant new data that allows the organization to compete proactively, and lead the industry rather than playing catchup.

Chief Information Officer (CIO)/Chief Technology Officer (CTO)

This executive wants to know that any new solution is going to be technically feasible, not interfere with existing solutions, and be futureproof. They will want you to provide specifics of different vendor capabilities, investigate how the technology integrates with existing technology, and provide concrete reasons it's the best option. There are typically two types of CIO/CTO - those who are excited by new solutions (and the opportunity to be 'the one' to introduce them), and those who are cautious to adopt new systems (and therefore hold onto legacy systems which 'work good enough'). The former is no problem to persuade, but you'll have to prove to the latter that there are significant holes in functionality and data in the current system.

Chief Financial Officer (CFO)

This executive is all about money and budget. If you cannot prove a reliable ROI for the new system, you cannot get their buy-in. Explore all the angles and compare costs at each stage of the supply chain, identifying wasted budget and especially opportunity costs. After all, the value an SCM system brings is in decreasing waste and increasing performance, so it needs to be spelled out with logical line items. Ultimately, you need to prove to the CFO that this solution saves money.

Supply chain management software is a long-term purchase, so be sure you're looking far into the future when picking such a solution. Here are the major trends emerging in the SCM software market:

Automation: Due to advancements in machine learning and algorithm development, many systems are able to detect patterns and predict future ones. This reduces the amount of human input required, and saves time for every link in the supply chain. 

Corporate social responsibility (CSR): Due to the rise of social media and consumers with greater awareness and ability to talk back to organizations, supply chains and sourcing are becoming regular topics of conversation. Systems that enable flagging of potential ethical and human rights issues for members of the supply chain is important to keep the whole supply chain 'clean.'

Distributed order management (DOM): This is a type of supply chain tool rising up between ERP and SCM systems. It follows the automation trend by allowing users to set up rules that dictate how order fulfilment is performed. These are being used by manufacturers who sell via distributors rather than directly. 

Eco-friendly logistics: Following the corporate social responsibility trend, there is a larger push for supply chains that cause minimal damage to the environment. The waste-reduction and transportation-shortening abilities of SCM tools are playing a greater role on lowering the burden on the environment.

Ecommerce supply chains: Many retailers' ordering actually happens mostly or entirely online, which is reducing the need for POS systems and increasing the need of SCM systems to integrate with front-end digital storefronts. 

Focus on optimizing existing manufacturing lines: Integrated, advanced systems are becoming more popular and plentiful as organizations abandon vertical integration in favor of specialization and niches. 

Greater business intelligence: Thanks to the rise of big data and the decreasing price of BI (as more vendors enter the market), organizations are gaining visibility into what happens within their departments and with their suppliers. SCM tools will have to match these increased expectations.

Increased labor management needs: With greater control over automatic systems and data (like inventory) already in place, SCM tools are now pushing to include project management and task list automation to optimize worker activity throughout the supply chain.

Internet of Things (IoT): In factories, warehouses, trucks, and throughout the supply chain, there is an increase in internet-enabled devices that can inform an SCM system about status and problems anywhere, at anytime. For example, truck movements can be tracked, and warehouse robots can be stopped or started automatically based on activity down the chain. These features will help future-proof your system. 

Less centralized control: Supply chains are becoming less vertical as organizations niche down, which means SCM systems need to communicate with partners who are outside your organization. 

More global competition and risk: The massive online marketplace takeover (Alibaba, Amazon, etc.) and the global adoption of technology poses many more potential risks. Being a major regional player may not be good enough anymore, as smaller suppliers struggle to keep up with global buyers. Many smaller organizations are using enterprise SCM tools to reach higher status and ability.

On-demand SCM software (SaaS): One of the bigger general trends in enterprise systems is the move away from a one-install-and-you're-done model to a Software-as-a-Service (SaaS) model. SaaS solutions charge a much lower price on a monthly basis per each user, and data is accessible from any device and preserved in the cloud. Expect just about any SCM system you procure to work in this way.

Removing silos: Whether you own the supply chain or just partner closely with others in it, getting on a common technology platform to remove data and communication silos is vital. Supply chains are converging, and your system has to be ready to integrate them to stay ahead of the competition.

Auto ID data capture (AIDC): A system that identifies an object (a material, part, or product), gathers data on it, and submits it to a system without needing human interaction.

Assemble to order (ATO): A modular product that is built from existing, pre-fabricated components, waiting to be assembled based on orders. (For example, a computer where the internal components can be selected before shipment.) 

Build to order (BTO): A product that has a standard base design or SKU, but whose parts can be modified based on an end consumer's choices before the product is built. (For example,  choosing color, trim and accessories for a luxury car.)

Digital copy (DC): A digital product which is made from the master copy on-demand to be saved to consumer's own storage device. (For example, an academic research paper.) 

Distributed Order Management (DOM): An SCM system that helps organizations that use distributors locate required parts against orders from a common source.

Electronic requests for X (e-RFx): A feature of an SCM system which automates requests for either quotes, proposals, or other documents between a supplier and a buyer. 

Engineer to order (ETO): The product is 100 percent custom, designed and built to the buyer's specifications. This is generally for one-off orders, like a house or construction equipment.

Key performance indicator (KPI): A metric in an SCM tool that gives analysts at-a-glance insight into how well something is performing. (For example, an inventory management system may have a KPI of 'oldest stock in warehouse,' where no stock should be older than 15 days before being shipped out to its next destination.) 

Made to Stock (MTS): The typical mass-produced product, made based on demand and sales forecasts for distribution and purchase. (For example, toothpaste rolls.)

Radio frequency identification (RFID): A tagging technology that can be embedded into products (or their containers) to allow for automated detection, identification, and scanning of said products into a computer system without requiring holding and scanning from a particular angle, like a barcode. These are useful in automation of inventory and logistics.

Supplier relationship management (SRM): This is an area of SCM tool functionality that gives buyers insight into the metrics of their suppliers, with the goal of maximizing coordination and adding value on both ends.

Vendor managed inventory (VMI): A function of SCM systems where suppliers can manage their inventory in buyer warehouses and other facilities directly, without the buyer's input. This reduces burden on the buyer, and enables suppliers to be more involved in their customers' success.

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