The Carillion collapse has stolen the UK headlines over the past month or so, a reminder of how important supplier management is.
The news that the company had gone into liquidation shocked those in its supply chain as well as those working in the construction sector. The aftermath has seen hundreds of job losses and potential closure for many suppliers.
Poor supplier management was one of the main causes of this crisis and there are many lessons your organisation can learn from the mistakes made by Carillion and the buyers which worked with them..
Find how Delta eSourcing can improve the efficiency of your business with our supplier management software.
How to achieve effective supplier management?
Going forward, all public sector organisations must evaluate and manage suppliers on several factors, not just on cost reduction. The type of approach reduces the chance your organisation will be hit by a Carillion-style crisis.
Cost reduction is incredibly important to the public sector as the budgets are constrained. However, it is not an effective sole strategy when evaluating suppliers.
Basing your decision on cost alone will only put your organisation at risk. Pushing for the cheapest price could harm your suppliers financially as they will try to undercut competitors on cost. Down the line this means that quality will be compromised and the costs needed to fix the faults could easily outweigh the short-term savings.
Use innovative supplier management software
To improve the efficiency of your organisation’s supplier management, make sure that you are using up-to-date technology that will deliver in-depth evaluation of strategic supplier performance. Delta eSourcing’s supplier management software allows buyers to compare strategic suppliers against others.
Comparison data is incredibly important as it allows your organisation to analyse and track the information it needs throughout the supplier management process. On top of this it can also assist with the identification of supplier risk and finding areas for improvement. Your organisation can use this information for future tenders.
Another supplier management to tip is to record any stand out supplier practices as this is the type of business you should aim to work with more. By doing this you can consider ways to extend the working relationship.
Collating data like this means that your organisation can achieve a deeper understanding of the market it is working with and its key suppliers that it should be working with.
How can Delta eSourcing help your organisation?
The failures of Carillion give public sector bodies a lot to think about and moving forward buyers must consider supplier management software, such as that offered by Delta’s Supplier Management module.
If you are interested in improving the efficiency of your organisation’s supplier management strategy, get in touch with Delta eSourcing today.
Request a FREE demo of Delta eSourcing and we can find a solution that will meet your organisation’s requirements.