Increased transparency in the supply chain is just one of the challenges faced by suppliers and demanded by customers.
Supply chain management is a complex business. Faced with increasing globalisation and calls by consumers for more socially responsible procurement policies, organisations are struggling to build supply chains to meet the challenges of these competing demands.
“With an increasingly connected world and changing consumer behaviours, we have seen a demand for improved supply chain transparency,” said Darren Lynch, supply chain lead at Accenture Ireland. “Some examples include ensuring ethical behaviour, fair trade, child protection and professional conduct in supplier relationships.”
It’s a trend that Alan Phelan, CEO with eProcurement software provider, SourceDogg also sees, particularly in the context of recent supply chain difficulties in the food sector.
“Questions need to be addressed such as who is spending on what supplier and how rigorous was the tendering process? This is particularly challenging for larger organisations with geographically dispersed locations – all applying their own interpretation of company procurement policy. Maintaining oversight of all procurement is therefore a key challenge.”
But structural changes in the global economy and the emergence of more complex supply chains are making this transparency difficult to achieve. The importance of supplier relationship management is coming to the fore according to Prof Edward Sweeney, former director of learning at the National Institute for Transport & Logistics and current head of engineering systems and management at Aston University in Birmingham.
“The focus by firms on core competencies has resulted in many elements of supply chain functionality being outsourced to third parties. This process of vertical disintegration has resulted in supply chain architectures becoming more virtual and created a sharp focus on the importance of relationships and their management across supply chain networks,” he said.
Dr Con Sheahan, senior lecturer at the Enterprise Research Centre, University of Limerick believes that organisations are struggling with something far more fundamental.
“What we perceive to be the biggest gap out there in practice is the connection between demand in the market place and supply,” he said.
“We need to be thinking a lot more about demand and how it connects with our supply or the lack of it. We must look at the supply chain as more of an integrated model than independent disciplines.”
Dr Sheahan points to a far shorter timeline for market place response and calls for decision support methodologies to be brought into the internet age.
“A lot of decision-making is still manual. There hasn’t been enough attention focused on supporting the decision maker at all stages of the enterprise. The tools for decision support haven’t really changed that much but they need to improve dramatically from their current base,” he said.
But electronic technologies are having an impact on payment elements of the supply chain according to Simon Bell, commercial manager with Sage.
“One of the key initiatives that we see coming down the tracks in terms of its potential impact on the supply chain is the national payments plan.
“It’s about modernising the payments system in Ireland, moving it from a traditional paper-based system, with cash and cheques to more electronic payments. We feel that for Irish businesses there’s going to be a fairly significant impact in terms of the way they do business with others, within Ireland and abroad,” he said.
The SEPA or Single European Payments Area, which came into effect in March of this year, was well flagged. Ireland records one of the highest compliance rates at approx. 95 per cent.
“This is opening up new opportunities for Irish businesses to trade with other jurisdictions and brings down the cost of doing that,” said Bell. “It allows companies to focus not on the back end so much but on delivering that new business.”