What you don’t know about your suppliers can harm your business and its profitability. Here’s how a digital supply chain platform can help.
- Reactive decisions about sourcing can lead to selecting non-compliant vendors just to keep product and revenue flowing
- In today’s business environment, that’s a dangerous way to operate
- 85% of global consumers have become more conscious of sustainability and will go out of their way to avoid products that don’t meet their standards
- It’s a data-driven world, and you need the right data to assess, audit, and monitor your vendors through the entire supply chain
- A digital supply chain platform will enable you to meet your ESG goals, and companies that do it right see 10% to 20% faster growth and valuations than their competitors
- Benefits of digital supply chain planning go beyond ESG goals to offer operational efficiencies and expense-cutting measures that boost the bottom line.
Sustainability doesn’t happen by accident. It takes planning, dedication, and a data-driven approach to decision-making to not only reach but perpetuate your environmental, social and governance (ESG) goals. Proactive decisions are required to mitigate risk. Reactive decisions can lead to the selection of non-compliant production vendors and questionable raw material suppliers in the chase to keep the revenue flowing.
Today’s world and your customers demand transparency and accountability. Smart company leaders know the risks of poor decisions, that a strategic investment in a digital supply chain platform keeps them on the sustainability track, and that ESG is essential to business value today.
Digital supply chain planning and management enables organizations to integrate disparate systems, easily manage supplier compliance and assessments, optimize production schedules, reduce all sorts of risks, and make the sourcing decisions that lead to a stronger supply chain and improved margins as well as profits.
But first, let’s discuss some compelling business reasons
You should know that failing to meet ESG goals can create a major PR headache (remember Nike and Apple?) that can damage your business significantly, perhaps irreparably. In today’s business ecosystem, you can run, but you can’t hide.
Digital supply chain solutions allow you to capture the real benefits of your ESG efforts. Those companies that get it right see 10% to 20% faster growth and valuations than competitors in their sector.
This is due to operational efficiencies and waste reduction, as well as mitigated risks. In a nutshell, ESG is a vital part of measuring a company’s health, performance, and long-term competitive success. It’s about today, but it’s also about tomorrow. And it all begins with sourcing.
A sustainable business requires new technology
It is a new world for businesses that really want to thrive: 85% of global consumers have become more conscious of sustainability when making purchasing decisions, 55% of US customers say they’ve made at least some changes in that direction, and these numbers are only going to rise.
The necessity is for an end-to-end solution – one that enables more confident and actionable decision-making. Your organization needs the ability to:
- Plan, schedule, and perform multiple supplier assessments
- Capture and evaluate results
- Generate post-assessment improvement plans
- Assist supplier users with training
- Create an exit plan for non-compliant suppliers.
It’s difficult to manually stay on top of suppliers and manage compliance for social and environmental sustainability while boosting both your and the supplier’s economic sustainability. This is what makes a digital supply chain platform necessary for today. With solutions to support your corporate social responsibility (CSR) initiatives, you are well supported to:
- Manage social assessments and audits related to working conditions, such as the Social and Labour Convergence Program (SLCP), Better Work, and ABVTEX.
- Manage environmental assessments and audits for environmental impact per standards set by bodies such as The Higg Index.
- Manage supplier compliance with a self-management environment where they can upload corrective action plans as well as post implemented improvements.
A digital solution also means reduced time-to-market and supply risk, because the time to identify and qualify the best suppliers based on your ESG criteria is just days instead of weeks.
You can’t manage your sourcing without data, and that requires a single source of truth – a repository for all types of audits and scores. The holistic, balanced, and in-depth view you get of each and every supplier means you can make truly informed sourcing decisions. This leads to stronger partnerships within your supply chain as vendors benefit from a system that is both fair and efficient. It also motivates them to adopt best practices as they see that compliance generates more business for them. It’s a truly symbiotic relationship.
Sourcing management for strategic outcomes
Today’s supply chain networks are demand-driven and connected. You need the right technology to monitor current selling trends and make sure popular products are quickly (and sustainably) sourced and delivered.
We spoke about margins earlier, and margin improvement requires the scope to optimize sourcing decisions, view offshore production, monitor the movement of goods, and improve information flow with your trading partners. Improved information flow means better collaboration with your global network, so you can work together to optimize complex sourcing and production scheduling.
Supplier compliance is a crucial factor in meeting your ESG goals and overall business strategy, but digital supply chain solutions also enable your company to meet good manufacturing practice standards, such as:
- Compressing purchasing lead times by positioning raw materials for planned production cycles or series
- Cutting unanticipated airfreight expenses by ensuring on-time deliveries from production facilities, no matter where they are in the world
- Balancing production capacity and product demand to improve fulfillment rates
- Maintaining quality standards and reducing product defects
- Managing on-site quality audits and taking action to correct non-compliance issues that include on-time deliveries, completion rates, sample approvals, performance testing, and other challenges.
A digital supply chain platform is all about optimizing sourcing decisions, tracking vendor performance, reducing cycle times, increasing visibility, and automating collaboration to make sure you meet not only your ESG goals but also your bottom-line financial objectives. It’s simply good business.
Make Better Sourcing Decisions and Boost Your Bottom Line with Logility
The Logility® Digital Supply Chain Platform accelerates the sustainable digital supply chain by leveraging data-driven tools such as advanced analytics and AI to empower your business with greater visibility.
We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.
Register here for our webcast on March 29, 2022: Create Resilient Sourcing Strategies in the Face of Supply Chain Disruptions, One Brick at a Time