Finding Nemo … er, Suppliers!

Ashima 2

… Probably the last resort for most as far as supplier identification is concerned!

(This post comes to us from Ashima Malik, Principal, Sourcing & Procurement Practice, Infosys. This is her second post in a series, complemented by her amazing drawing skills!)

In recent years, the avenues of supplier sourcing have expanded beyond the regular payable databases, what with the ability to look for them on professional and online networks etc. There is another option closer home, however, that is often overlooked.

Let’s, for a moment, go back to the world where the fluidity of the currency was not practiced and much of the trade was dependent on the good ol’ barter system. I could imagine as to how transactions and exchanges would be on more balanced trade terms: Three cows for one camel! A successful transaction would auto-check many rudimentary principles of sourcing, supplier risk, and performance management. It was a perfectly reliable and a much simpler system.

I am not against the flexibility and portability that a currency system brings to the table. However, it is disappointing to see that we are failing to take advantage of this perfectly self-checking system in trade.  To bring it into context - it would not sound an altogether novel concept to explore supply options within the enterprise client base. Yet, the rarity of this practice can be seen from the miniscule percentage of buy-sale agreements that exist within the overall contact pool.

The popular sources of supplier research are data from AP, P2P systems, external portals and supplier networks. However, I am not sure how many of us really scan through the AR systems to look at the potential sources of supply amongst the clients. I see the following clear benefits:

  • Better Supplier Relationship Management: When existing clients become suppliers, it will most likely ensure a steady flow of repeat business. It would also increases the chances of moving up supplier grading scale to a more strategic supplier. That’s brownie points to our very own procurement department!
  • More emphasis on co-creations and strategic joint ventures: A more balanced and equitable position in business transactions is mutually empowering for both organisations. This serves as a perfect stage to explore strategic and innovative avenues with regard to the product, market, green initiatives, CSR, etc.
  • Mitigates risk elements substantially: A purchase-and-sale agreement has a number of auto-balanced terms that aid in lowering the financial liability for the firm. Some of these stipulations include:contingency, liability and penalty clauses in the agreement -- and not to forget the payment terms off-set any incongruous DPO/DSO policy at either organization.
  • Facilitates key supplier initiatives: Critical and high-risk ventures like co-creation, disruptive/break-through product launches are especially more gainful with a mutually benefiting trade positions. 
  • Easier tactical management like data management, onboarding, maintenance, migration within CRM and P2P ERPs.

Voices (4)

  1. Ashima:

    Thanks DP

  2. Chander Kant Vashistha:

    Very refreshing and pragmatic thought on looking at another pool to fetch suppliers from. A reciprocal business relationship is the best thing to have. Well done Ashima and the sketch is cute in looks and message linked tightly to post’s theme.

    1. Ashima Malik:

      Thanks CK. True – managing relationships (reciprocal in this case) is one of the very important, but largely over-looked, aspects of a Purchasing.

  3. D P Chakravorty:

    Good follow through write up and also agree to the sketching skills of Ashima. Keep going.

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