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The dependent nature among procurement, supply chain, and compliance teams often results in seamless, on-time deliveries, but it can also give way to tense relationships if competing interests are at stake.
Take the following scenario:
A supply chain manager at a top aerospace & defense firm works on securing parts for a key component of a fighter jet. She is working under a fixed budget and strict deadline, and has built strong relationships with multiple suppliers in order to secure the materials and delivery dates at the right price range. She passes the information over to the procurement and compliance teams who begin the due diligence process and find that one of the suppliers has poor cybersecurity health, not to mention their financial solvency scores are questionable. The supply chain manager wants to move forward with the suppliers, as her deadlines are fast approaching, but the procurement and compliance teams are hesitant. The situation escalates to the leadership teams to resolve the issue.
Do any of those dynamics sound familiar? If so, you’re not alone.
While each company structures their procurement, compliance, and supply chain teams uniquely, there usually comes a point - or several - where one party’s priorities are at odds with the other, impacting the ability for the other team to reach their goals as planned.
Some of this can be attributed to the inevitable complexities of global supply chains, but there still remains opportunity for improved cross-functional collaboration and fewer information silos.
Supply chain, procurement and compliance teams rely on each other to get goods and services to the right place at the right time, while keeping the company’s safety and wellbeing in mind throughout the whole process. To keep everything running smoothly, however, numerous insights across multiple risk domains must be available. And when these key data points are inaccessible to select parties, miscommunication and errors abound, disrupting the entire process.
For example, risk & compliance professionals may conduct analyses using regulatory and security-focused data, while supply chain uses operational insights, and procurement may rely largely on financial information. But using one centralized platform where all 3 parties can collaborate and monitor vendors using the same robust set of insights not only saves time, but it prevents misunderstandings and allows for quick remedies to sudden disruptions, due diligence concerns, and value chain transparency.
When a tornado occurs where a key manufacturing plant is located, supply chain professionals want to know immediately so they can coordinate with the appropriate stakeholders to mitigate damage - hence the importance of real-time alerts within a supplier intelligence platform. And for procurement teams, economic fluctuations impacting, for example, commodity prices must be brought to their attention as soon as possible.
In both scenarios, each team must lean on the other for potential resolutions. In the event of a natural disaster, it’s likely that a supply chain professional would need to quickly coordinate with procurement and compliance teams to negotiate contracts with current and/or alternative suppliers. And substantial market changes require procurement to work with supply chain professionals on lower-cost alternatives if commodity prices spike.
Centralized platforms where all teams can collaborate and access the same insights reduces time-to-action, prevents miscommunication, and ultimately bolsters trust with your suppliers.
Supply chain teams, particularly at global enterprises with complex value chains, are often under immense pressure to deliver goods at set costs and within inflexible timelines. So when risk and compliance teams raise concerns while undergoing supplier due diligence checks, the project’s progress is jeopardized.
But supply chain professionals usually don’t have easily digestible data that lets them perform cursory checks that might raise concern before they’re flagged by procurement and compliance teams (perhaps weeks later). If they did, they could get ahead of roadblocks and recommend possible solutions to the appropriate teams - including vendors - preventing delays in their tight project deadlines.
Conversely, if concerns arise during ongoing supplier audits, procurement and compliance teams can use supplier discovery capabilities to assess alternative vendors, or perhaps request more context from the supply chain managers directly within their platform.
Understanding your entire value chain beyond Tier 1 is a difficult yet critical undertaking for both supply chain and procurement professionals, albeit for different reasons. On the supply chain side, working within a supplier intelligence platform that maps your n-tier network helps identify hidden risks and dependency points where you may have a false perception of supplier diversification. Once these single-source risks are identified, you can collaborate with procurement and compliance teams to assess alternative suppliers and contingency plans, cutting down on supplier discovery, evaluation and onboarding time.
For vendor compliance teams, an increasing number of regulations, policies and proposals are pressuring or outright requiring that companies track the ESG performance of their Tier 2 and 3 suppliers. Laws and initiatives such as the German Supply Chain Due Diligence Act, Norwegian Transparency Act, EU Corporate Sustainability Reporting Directive, and the SEC Climate Disclosure proposals are keeping compliance professionals busy, as they must understand n-tier networks and collaborate with supply chain leaders when regulatory risk arises.
Global supply chains are not getting any less complicated. But when all teams operate from the same set of knowledge, you can create efficient case management workflows, knock down information silos, and reduce time spent on supplier onboarding and contractual negotiations.
