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Supply chain management – In-house or outsourced?

Article, Industry Insights

Supply chain management – In-house or outsourced?

Supply chain management often looks easy to the business, but, in today’s world of geo-political tensions, regulation, increased governance, customer expectation and reputation risk, it’s harder than it seems. What are the key things to think about when deciding whether to manage your supply chain in-house or work with a third-party provider?

Companies are under pressure. So many companies are spending too much of their IT budgets maintaining the legacy systems that they need to keep which is stopping them from developing much needed differentiation at the speed they need.  Supply chain due diligence regulation is placing an additional burden on companies – to understand their supply chains and the environmental and social policies, processes and actions of their suppliers.

Companies are having to layer up more and more information. It’s no longer enough to check the financial stability of a potential supplier; they also must understand suppliers’ health and safety policies and performance, GHG emissions, cyber security, sanctions and environmental and social impact and be tracking that constantly.

Supplier management often looks easy to the business, but, as every procurement professional will know, in today’s world of geo-political tensions, regulation, governance and customers and reputation risks, it’s often harder than it seems.

With supply chain management, Chief Procurement Officers often find there are 6 parts to the problem:

  1. Supplier sourcing – Finding the right suppliers to respond to business need to scale and ensure resilience.
  2. Data collection – Collecting the information required from suppliers across the world speaking different languages in different time zones, often with a lack of awareness of the types of information you want and need to collect.
  3. Data verification – Finding the resources to assess that the information suppliers have provided is correct to meet due diligence expectations of regulators.
  4. Risk assessment – Having the ability to store information in a way that enables it to be used to identify where the highest risks are and enable you to focus on the right things.
  5. Supplier due diligence/improvement – which generally means some kind of independent verification and auditing process.
  6. Reporting – Producing the right reports to meet myriad of regulations with which global businesses now have to comply – without having to resort to extensive manual processes.

Generally, when it comes to outsourcing, companies fall into three camps. Are you a business that sticks to building things that are part your core competence? Is it a simple ROI calculation to work out whether you buy or build? Alternatively, do you collaborate to extend and future proof your business with best of breed solutions?

As with most partnering decisions, when deciding whether to manage supply chain due diligence and reporting in house the key questions businesses need to ask are:

  • What is the risk of doing this in-house?
  • How will we ensure effective and efficient data collection and data accuracy?
  • What is the opportunity cost of doing that?
  • What is the time-line and will we be ready to meet emerging legislative changes?
  • How will we track new regulatory requirements so we can be sure of compliance?
  • How will the solution need to change overtime to meet increasingly rigorous legislative and stakeholder requirements.
  • How will we monitor those changes and manage any ongoing development burden?

Most companies don’t have unique requirements when it comes to supply chain management. It makes sense to deploy in-house IT development and procurement resources on things that give you competitive advantage, differentiation, economies of scale and operational efficiencies.

Customers that work with Achilles for supply chain risk management talk about these sorts of outcomes post implementation:

  • Having all supplier information in one place so that they have a trusted and complete view of their supply chain, making it easier to spot the risks.
  • Supplier management and regulatory compliance being so much easier in the MyAchilles dedicated platform compared to running with Excel spreadsheets and PDF forms
  • Procurement teams being so much more agile and able to respond to business needs both in terms of sourcing alternative suppliers and meeting new business demands.
  • Freeing up time and being able to focus on doing things closer to the company’s core business.
  • The reporting cycle becoming much simpler and faster.
  • Having systems and processes to drive procurement, supply chain management and supply chain compliance efficiencies.
  • Having much better control of the end-to-end supply chain with Achilles acting as the extension of the internal team.

Let Achilles be an extension of your business and support your supply chain risk management goals. We work across your supply chain, reaching into the areas that you cannot to give you the supply chain confidence you need.

Get in touch to book a no obligation meeting to find out how we can support you.

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