Monitoring your supply chain is not easy – if you have a large number of suppliers, it can be a challenging process to monitor the activities of your suppliers. Below are some of the key reasons why it is important though to increase visibility of your supply chain, monitoring your suppliers and the products that they provide.
Reason 1: Quality defects
The first reason why it is important to establish procedures to monitor what you are buying from suppliers is that there may be defects in what you receive. Indeed, it is possible that the quality of the inputs that you receive may gradually decline over time. Having procedures in place to identify variations in quality are important to ensure that you can quickly resolve any quality defects and avoid issues with the inputs from impacting upon your product or service.
Reason 2: Practices not as expected or laws not being followed
Another reason for monitoring your suppliers is that the practices that they are following may not be as you expect – and may not be in line with your company standards. Having a supplier deviate from acceptable conditions can be a risk for your firm and its image – just because activities are undertaken by a supplier rather than directly by your business does not mean that you should not monitor the particles of your suppliers.
Reason 3: The possibility of counterfeits or excess products made
Another danger is that suppliers that you rely on begin producing excess products, potentially selling such excess inventory, which may compete with your own sales. Whether this is done directly using your brand image, or potentially with slightly modified versions of the product, monitoring your supply chain can potentially help identify business practices of your suppliers that run counter to what you would expect.
Reason 4: Maintaining an understanding of what is involved
A final reason why it can be useful to monitor your supply chain is to increase your understanding of the activities involved in producing your inputs. Building an understanding of the overall process involved can help ensure that you do not become dependent on any one supplier – increasing your ability to switch suppliers should there be a need to. Building an understanding of the activities involved in producing your inputs can also alert you to improvements that may improve your product.