Category Archives: Supplier Management

TradeCard: Transaction Management for the Global Supply Chain Part I

In yesterday’s post on how it’s sourcing, procurement, and global trade management, we mentioned how a critical part of global trade is finance and document management. One company that facilitates this process is TradeCard, an end-to-end SaaS transaction management solution that connects over 4,000 buyer and supplier companies across the world with local support in over 50 countries. And while they aren’t the only company that facilitates this process, with notable competitors being Integration Point and their extensive suite of import, export, and supply chain compliance solutions and TradeBeam with their import, export, and visibility solutions, they are the first solution that I’ve seen that implements end-to-end transaction management from the PO to final settlement (including chargebacks) with support for financing, document management, 3rd party freight forwarders, and factory floor shipment packaging. Furthermore, their solution, which supports the physical, financial, and information flows from all parties, focusses on the alignment of the flows.

The financial flow is supported by way of a procure-to-pay solution that enables pre- and post- export financing solutions, payment protection, invoice discounting, settlement, and chargebacks. Through agreements and alliances with over 25 banks, insurers, and other third parties, the TradeCard platform allows a suppier to request financing as soon as the purchase order is received. Then, depending on the supplier’s credit rating and the amount of the request, the request will be forwarded to one or more financing partners who will offer financing at standard terms or the TradeCard credit line, where the TradeCard platform can automatically grant certain financing requests under standard terms on behalf of the partners in the financial network.

The time of the financing request is flexible. The supplier can request financing at any point from the receipt of the purchase order to the receipt of goods by the buyer, and might even be able to request financing beyond receipt of the goods by the buyer, depending on the buyer’s standard payment terms. In addition, the platform allows the supplier to offer invoice discounting on early payment by the buyer as soon as the invoice has been accepted. Finally, the platform allows for electronic payments, which completes the end-to-end financial lifecycle of the transaction.

The physical flow is supported by their collaboration solution, which allows buyers and suppliers to collaboratively share current demand data and collaborate on forecasts and production plans, the Factory Xpress solution that allows for the creation and execution of detailed packing plans, and the document management solution that allows for the creation and transmission of documents that are required by freight forwarders, customs agents (for import and export), and distribution centers.

The information flow is supported by their Procure-to-Pay, Collaboration, and Factory Xpress solutions as well as their TradeCard Advantage solution that allows for queries and reports across the platform and the transaction data that it contains. It’s also supported by their new Custom Objects Toolkit that allows TradeCard to quickly create custom extensions — that can take the form of integrations, reports, or global trade documents — for customers on an as-needed basis.

By integrating the three flows, TradeCard provides a single view into the global supply chain for buyers, suppliers, factories, and partners around the world, which can be integrated into the platform as needed. TradeCard can, and has, integrated multiple ERP, best-of-breed, and home-grown sourcing, procurement, and global trade solutions into its platform in support of its hundreds of global Fortune 3000 customers. Furthermore, over 150 service providers already inject services into the platform in the form of financing, payment protection, inspection, and logistics, which a customer can take advantage of day one.

Tomorrow’s post will dive into the physical supply chain flow and the solutions that TradeCard provides.

What’s the Biggest Problem with Sourcing from China

Quality? Supply Reliability? Or Management Expectations?

In last year’s CPO Agenda inaugural debate on “Assimilate to Accumulate”, Martin Lockstrom, of the BMW-SMI Center for Purchasing and Supply Management at China Europe International Business School, said that the most difficult thing is not necessarily to manage the Chinese suppliers but managing HQ expectations on these kinds of things.

With all of the issues making the news in recent years with respect to outsourcing from China around supplier quality, reliability, and intellectual property, it’s important to remember that the biggest issue is not always the supplier, who may respond well to sincere attempts at supplier improvement initiatives, but management expectations. It is amazing how many executives still believe that outsourcing will fix all their problems and that, because outsourcing to China has been going on for over a decade, the supplier will deliver high quality and cost savings off the bat. While the irrational exuberence is not at the high it once was, there are still executives who hold on to unfounded beliefs because “it worked for the competition”, failing to realize that the competition may have worked years on supplier development to get the performance they are achieving.

Done right, sourcing from China will pay off, but great results can still take time.

It’s Sourcing, Procurement, and Global Trade

A few years ago, I took the time to remind you that it’s Sourcing and Procurement because it appeared that some vendors wanted you to believe that it’s e-Sourcing or e-Procurement, or some fractured combination of both, because that’s what they have and they want all of your business.

As I said before, e-Procurement and e-Sourcing are not the same thing. From a supply management perspective, they’re two halves of a whole, one tactical and one strategic. And while they bring value alone, combined they bring much greater value. Sourcing leads into Procurement, usually off of a contract, but sometimes after e-Negotiation or decision optimization alone, and Procurement leads back into Sourcing, through the analysis step. Without Procurement, the organization wouldn’t have a large transaction database and extensive visibility into spend, and without Sourcing, there would be no strategically negotiated contracts to buy against, leaving procurement managers the freedom to spend willy nilly.

But when it comes to supply management, Sourcing and Procurement are still not the full picture. While they are the full picture from the viewpoint of the buyer / analyst in a mid-sized or larger supply management organization, they do not address the supply side, or the fact that goods need to come from a supplier, sometimes by way of a distributor, and end up in the buyer’s warehouses for shipment to stores and/or end consumers.

The goods have to be packed, shipped, exported, imported, and, sometimes, financed. And the settlement function has to take into account invoice discounting and chargebacks, at a minimum. This doesn’t sound too bad until you realize that the average international shipment requires twenty or more documents for export and import, especially when the US or the EU is involved. Ever since the introduction of 10+2 and new advance cargo declarations in the EU, it seems that documentation requirements have been compounding ever since.

And while this functionality does not necessarily have to be in the e-Sourcing or e-Procurement system, it is needed by any company doing international business and it should be easy for a company to push data out from the e-Sourcing/e-Procurement system into the appropriate Global Trade Management system and pull the necessary data back in for analysis.

Because, when you consider the average transaction in today’s global supply chain end to end, this is what you usually end up with.

Sourcing – Spend Analysis (what needs to be sourced)
Sourcing – e-Negotiation (RFX, Auction – who will it be sourced from)
Sourcing – Decision Optimization (optional, to analyze the bids)
Sourcing – Contract Management (to store the awards)
Procurement – Requisition (for a Bill of Materials)
Procurement – Approval (for the requisition)
Procurement – Purchase Order (for the supplier)
Global Trade – Financing (can be pre or post invoice)
Global Trade – Packing (goods have to be properly packed and labelled)
Global Trade – Shipping (goods have to be shipped)
Freight Forwarder (if a third party handles the shipping)
Export Documentation (for the supplier’s home country)
Import Documentation (for the buyer’s home country)
Procurement – Good Receipt
Procurement – Invoice
Global Trade – Invoice Discounting (if the buyer pays early)
Procurement – Reconcilation
Procurement – Payment
Global Trade – Settlement (the purchase has to be settled in the source accounting system)
Global Trade – Chargebacks (chargebacks for penalties or returned goods have to be accounted for)
Procurement – Tax Reclamation
Sourcing – Spend Analysis (what needs to be sourced)

Key Questions When Assessing Supplier Health

A recent article over on Industry Week that indicated that it is “time for a supplier health check” made a good point — Tier 1 suppliers may need to expand globally in the high-growth markets more quickly than they had originally anticipated, and manufacturers need to know if their Tier 1s are up to this challenge. In order to make this assessment, they have to do a detailed supplier assessment of their current Tier 1 suppliers, which should ask, at a minimum, these questions:

  • Does the supplier have access to capital to retool and meet an increase in demand?
  • Does the supplier have the talent to support a ramp up? Or did they do significant layoffs?
  • Does the supplier have the leadership to accomplish a ramp up? Or was the management team significantly reduced by layoffs or attrition?
  • Does the supplier have the right technology to support new systems and processes?
  • Does the supplier have the right financial controls in place to support a larger operation?
  • Is the organizational structure suitable to expansion?
  • Does the supplier have a viable business plan to support an expanded operation? Has it been executing against the plan?

If any of these questions yield negative answers, the supplier might need to be replaced. The alternative, if the supplier is critical, is for the organization to take an ownership position in the supplier and get it back on track. Either way, the supplier base needs to change.

Does Your Supply Chain Have An Audit Trail?

A recent article in Industry Week on “Lessons Learned from High-Profile Product Recalls” had a number of good tips on what to do to prepare for a recall before it happens, but one tip in particular stood out. Specifically, the need for audit trails. Every risk management article these days talks about being prepared, identifying key stakeholders and information requirements, developing communication plans, preparing reverse logistics and fulfillment operations, and evaluating risk vs. cost, but few point out the need for good audit trails down to the component, and sometimes raw material, level.

Without a good audit trail, if a serious defect is discovered across a product line, or one or more food products you are selling is tainted with E. Coli or salmonella, you will have no choice to recall the entire product line because you will have no way to trace the defect back to the source and forward to only the affected units. For example, if all of the tainted soup cans came from a cannery in Michigan, then there is no need to recall the cans from Nebraska and Georgia. And if all of the overheating batteries came from one plant in China, and they were only used in two specific lines of laptops, and you have six, at most you will be recalling one third of the units.

So make sure you can trace each product back through each supplier, component manufacturer, and, in the case of food products, each grower. Otherwise, when a recall does happen, it could be financially devastating.