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Mind the Gap: Global Vendor Management

Global Vendor Management icons

Have you traveled on a train in a European city? Chances are you heard some version of the phrase: Mind the Gap. The phrase cautions passengers to watch the gap between a train door and station platform. I think the same warning holds true for anyone who ships freight around the world. While cargo moves freely across continents, technology might lag behind, creating a gap. This is when communication breakdowns happen—currency and language translations fail—and we’re reminded to watch our step. Freight sails away from one port, disappears for days or weeks, and surfaces at a new port. Information gaps mask potential delivery failures. And no company likes botched deliveries. Is there any solution?

Consider this: global sourcing, manufacturing, and sales are advancing rapidly leaving technology providers in the tough position of playing catch up. Because technology infrastructure differs from region to region, it is challenging (to say the least) for systems to communicate across continents. Imagine you are at your desk in Houston and you need to determine whether a completed order left the warehouse in China. It’s difficult, right? Now add in the aspect of tracking the shipment’s expected arrival in Hamburg. To get the information you need involves several languages, time zones, software programs, and much more. Even the most expert logistics professionals struggle in those instances. That’s where global vendor management programs shine.

What is global vendor management? I’m glad you asked. For some forward-thinking shippers in Europe, global vendor management, combined with the visibility of a global technology platform, eliminates information gaps and reveals new opportunities for savings, security, and consistency in global shipping.

Global vendor management programs are based on a foundation of purchase order (P.O.) management of global vendors. Using global technology, a provider manages the P.O.s and acts as the single point of contact between the company and its vendors. As P.O.s come in, the provider calculates the dates for cargo to be picked up and continues to verify as the delivery dates approach. The company no longer needs to arrange multiple order pickups or be concerned that one order won’t be ready for pickup. Instead, the company can:

• Monitor their shipments through the global technology
• See current shipment status down to the item level
• Reroute freight to account for increased demand or last minute outages within the supply chain
• Have the service provider clear their dock daily and bring freight to a consolidation point for shipment.

Here’s an example of how P.O. management might work.

Global Vendor Management

Global vendor management programs are available to shippers throughout the world. However, a few are unique to specific regions. Although they have P.O. management as a foundation, they are customized based on what the company wants to achieve. In Europe, three of the most common programs are:

Combined Program. Depending on the shipper’s goals, many services can be combined into a global vendor management program. Transportation, consolidation, warehousing, and customs services can be combined with P.O. management to efficiently address company requirements.
Vendor Assembly. All freight in a vendor assembly program is sourced for a single company. Vendor assembly provides fixed transit times and predictability for customers and consignees.
Merge in Transit. There are numerous ways to structure a merge in transit program. The important rule is to ship so that products never go to the company’s facility. Instead they are shipped from the vendors to the customer, with possible stops at a distribution center in between. That means the company never handles the shipments, or has to put them into inventory or reship the freight. This creates greater efficiency.

Global supply chains simply have more opportunities for service failure. Global vendor management programs, combined with solid P.O. management that is enabled by a single, global technology platform, can reduce the complexity of tracking all transportation movements. This holds true even for shipments that cross borders and oceans. Essentially, a solid global vendor management program is the better solution to the warning sign on a train platform. Instead of being reminded to “mind the gap,” you get a solution that bridges the gaps. No gaps, no pitfalls, no places to stumble and lose cargo. Global vendor management typically is the best way to help ensure a clear, smooth path for all your shipments, all around the world.

Thank you for reading and please comment below with any questions on global vendor management.

For additional information download the white paper, Strategic Insights to Global Vendor Management.

Comments

Shellea Mason

Very nice article!

12.10.13

Reply

Jake Peterson

From a process standpoint, the system laid out here is practical and useful. From what our team has seen experientially within PO Management, it is incredibly difficult to put into practice. I agree that current technologies leave much to be desired in this area, and that fact further sustains the massive pain point and opportunity within this space.

Our team manages PO's for Hospitality projects and we often experience a major disconnect both technologically and practically with the execution. Technologically, I come across legacy ERP systems that need to be phased out and cannot handle simple EDI and “data-dump” operations. Practically, we experience the difficulty coordinating with sub-contractors of the supplier who was issued the original PO from our client. This extra layer exacerbates communication issues with determining adequate quantities, reference numbers, and production schedules the client was expecting when the PO was originally issued. On an international level, I imagine the struggles are magnified. Our situation is 95% domestic business, and the PO's we manage are typically of smaller value and ship complete in less than five shipments. We are not facilitating the “blanket orders” on the level mentioned in this article, so our experience is little different.

Nonetheless, I think there will be an enormous opportunity in the next decade within PO Management as systems and IT develops within the sphere. To maintain this complete visibility into our client's business models, will greatly enhance our value-added services and further develop strategic partnerships that provide indispensable value. I think this area is a major pain point for Supply Chain in general.

12.10.13

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