Direct spend management can help wrangle manufacturing needs, weather coronavirus crisis

Procurement technology often gets noticed for its cost-cutting abilities with indirect spend, but the COVID-19 disruption has highlighted the value of other features, like supplier relationship management, supply chain collaboration and working capital management.

And manufacturers should take notice because direct spend management holds just as much savings opportunity as indirect spend, but manufacturers often haven’t deployed the technology yet.

Some companies still deal with cumbersome manual processes like tracking projects with emails and sharing error-prone spreadsheets that make version control difficult.

When the coronavirus crisis hit, it also amplified other common pain points — like manually addressing change orders, dealing with longer lead times and handling customer demands.

Working from home while dealing with manual processes makes productivity suffer and raises a lot of key questions. Who gets the mail at the office? How does a supplier reach you at home? Can you see all of your ERP activity by logging in from outside the office?

Risk to revenue

All of those problems become a risk to revenue. In this pandemic, preserving cash tops the list of priorities.

Some businesses that have been digitally transforming could more easily address those problems. They could see the benefits of having a single software solution that links their ERP with their suppliers and customers, and they had visibility into their spend, their inventory — and their options to react.

Increased visibility shows you demand and when to buy or how to tweak your supply chain finance or manage your inventory — allowing you to optimize your cash flow.

Coronavirus case studies

Two businesses shared their coronavirus experiences and how they’ve been coping with the disruptions by using software from SourceDay, a provider that focuses on direct procurement. Its solution for direct spend management links up ERPs between a manufacturer and suppliers or customers to improve the companies’ digital capabilities. Having that ERP connection with a supplier’s computers helps organize activities in a secure, real-time environment.

VirTex CEO Brad Heath said collaboration was critical for his company, which provides electronic manufacturing services (EMS) that help get products to market faster and at lower costs. Using SourceDay’s solution for supplier management and supply chain collaboration helped bridge the gap when VirTex experienced delays from suppliers, yet VirTex was able to maintain a high level of on-time delivery to its clients, Heath told the provider in an interview.

“We dropped into probably mid-80s from an on-time delivery (perspective) across several sites from our suppliers, but we were able to maintain greater than 96% on-time delivery to our customer base because we had resiliency and because we had the ability to go ahead and react with our inventory,” Heath said in a video with SourceDay that showcases how supplier collaboration and having a resiliency plan can mitigate problems, like on-time delivery disruptions.

DuraMark Technologies, a digital printing company, said communication via SourceDay’s solution proved more valuable than email because it brought internal teams together more efficiently and it fostered collaboration with suppliers during the crisis, when sharing timely information became more critical.

“Everybody’s been hit with the whole COVID effect,” said Chris Beaschler, left, DuraMark’s Operations Director, in another video. “It hits the whole supply chain, starting with our customers all the way to our raw materials to our suppliers. So we’ve seen increased lead times. And it’s figuring out how to manage through that.

“If we didn’t have SourceDay, it would have been a lot of back-and-forth communication through emails — a lot of things probably would have been missed. With COVID, your communication is just 10 times more important. … So seamless communication helped us. We didn’t get through COVID with no marks, but it definitely allowed us to manage through it.”

This Brand Studio post was written with SourceDay.