President Trump’s new trade tariffs recently resulted in a Pittsburgh-based brewery’s Chinese tap handle supplier hiking prices, first by 30%, then by 130%. The result? Brew Gentlemen’s order is gathering dust in customs while the brewery negotiates a new price.
This case highlights how a good supplier relationship is one of the building blocks of a successful business, and that’s impossible without effective supplier coordination. When coordination slows down, order fulfillment is delayed, workflows are disrupted, and miscommunication opens the door to even more costly issues.
The Challenge of Supplier Coordination
Supplier coordination, which focuses on the day-to-day activities required for productive communication and logistics between a business and its vendors, is not without challenges. The tools, systems, and processes an organization uses can lead to misunderstandings, poorly-guided decisions, and disrupted schedules. Additionally, businesses need to continually assess supplier performance, mitigate risks, and resolve issues that could slow down or disrupt their vendor relationships.
Yet, the challenges involved in coordinating with suppliers are not insurmountable. With a few adjustments, organizations can enhance their daily dealings in a way that contributes to long-term success.
Poor Communication
Coordinating with vendors effectively relies on clear communication, but language barriers, cultural differences, and communication styles can lead to misunderstandings. Additionally, time zones or reliance on inefficient methods often result in delays affecting a business’s relationship with suppliers and customers.
Organizations can tackle these challenges in various ways, starting with drawing up guidelines. These should set the tone for communicating with suppliers, paying attention to language style, the use of translation services, time zone differences, and methods. Where time zones and email delays hinder progress, regular video conferences bridge the gap, providing a platform for real-time problem-solving.
For example, instead of relying on email, organizations can use a mix of integrated communication tools and supply chain systems that enable real-time data sharing and more efficient collaboration. In a situation like the Pittsburgh-based brewery’s, these tools could facilitate earlier price change discussions via video or shared platforms before a shipment reaches customs, potentially reducing costly delays.
Additionally, automating routine tasks such as invoices and payments can prevent miscommunication, speed up processes, and free up employees to focus on more strategic vendor interactions.
Data Not Shared in Real Time
The longer it takes organizations and vendors to share relevant data, the more time and revenue are lost. Email eliminated the delays associated with traditional postal services. However, there are still delays associated with it, so if businesses and vendors want the visibility that makes it easier to make decisions and to track inventory and shipments, they need to share up-to-date data in real time.
One way of ensuring this happens is for businesses and suppliers to use the same digital platforms or enterprise resource planning (ERP) system. Often combined with a warehouse management system (WMS), these solutions provide supply chain data in real time, allowing both parties to make informed decisions quickly.
Unaligned Schedules
Supplier coordination breaks down when vendor timelines don’t match buyer demand. Rather than arising of their own accord, unaligned schedules result from slow manual scheduling processes and poor communication regarding changes in demand. Complex supply chains, resulting from regulation and compliance, siloed workflows, and incomplete customer data, also contribute to out-of-sync business and supplier schedules.
Synchronizing business and supplier schedules demands access to the most recent data regarding demand, which is made much easier when working with integrated systems. Customer data should be normalized for consistency and clarity, and businesses should take an exception-based approach that sees teams focus on significant changes, such as missing contracts. This can help organizations enhance their demand planning, which can improve coordination when communicated effectively to suppliers.
Bureaucratic Processes
Whether used by organizations or vendors, bureaucratic internal processes such as approval procedures can negatively impact coordination. Bureaucracy delays decisions, hindering productivity and potentially increasing costs that undermine procurement value. It may also lead to businesses refusing to take on new suppliers or ending relationships with existing suppliers that do not meet bureaucratic requirements, limiting innovation and the services they can provide to customers.
Addressing this supplier coordination issue begins with organizations assessing their processes to identify bureaucratic stumbling blocks. They can then implement new structures such as consolidated management roles, empower lower-level employees to make certain decisions, and encourage greater collaboration between departments for improved data-sharing and faster decision-making.
Manual Order Processes
Incorrect quantities, delayed, duplicated, or missed orders, and basing decisions or responses on outdated data are some of the ways manual processes can disrupt supplier coordination. Whether due to human error or the time they take to complete, manual processes impact data-sharing, lead to bottlenecks, come with high costs, and leave organizations with significantly less flexibility to respond to crises.
Survey results published earlier this year indicated the cost of manual data entry is approximately $28,500 per employee, and 50% of respondents also agreed that manual processes contributed to errors, delays, and potential compliance issues and financial repercussions.
The solution is to move away from manual inventory monitoring and order placement and tracking to electronic data interchange and application programming interface (API) integrations. By using these tools to share streamlined data from different sources in real time, organizations can reduce human error and manage procurement processes more efficiently. This should prevent bottlenecks and enable employees and suppliers to make appropriate decisions when required, rather than waiting for relevant information to be shared manually.
Strengthen Supplier Coordination
Brew Gentlemen may be faced with frustrating tariff-related delays, but clear communication from their supplier paved the way for renewed negotiations and improved coordination. Overcoming the challenges involved in coordinating with vendors takes time and effort, but by thoroughly assessing how their relationships with vendors play out and by implementing the necessary changes, organizations can strengthen coordination in ways that benefit all concerned.
About the author:
Kristie Wright is an experienced freelance writer who covers topics on logistics, finance and management, mostly catering to small businesses and sole proprietors. When she’s not typing away at her keyboard, Kristie enjoys roasting her own coffee and is an avid tabletop gamer.
