Supply chains are becoming more and more complex. More suppliers, more 3PL’s, more complex routing, more warehouses, more outlets. As the complexity increases, so too does the throughput. It’s inevitable that more errors will occur.
Aside from the obvious costs to business such as lost stock, poor accounting, lost sales, high buffer stocks, etc. what’s the impact when disputes over errors arise?
It wasn’t me
When an issue arises, everyone points to the other guy. The customer expected to receive the shipment on Wednesday. They haven’t received it and are confident the issue is not with them as they have outstanding and well audited ‘goods-in’ practices. The supplier is certain they shipped it on Monday on a next day delivery using a mutually agreed 3PL. The 3PL has their own records showing they collected the goods as instructed and delivered them within the delivery window. As far as each party is concerned, they did their respective job. The finger-pointing begins.
Check, email, check again, call…
The administrators get to work. Money and credibility are on the line. The trouble is the systems that one administrative team are following are different from the others. This makes settling disputes very difficult, and this is just one aspect. No matter who ends up footing the bill, all parties have ultimately lost. Statistics indicate a cost of £75-£100 per purchase order to manage inventory errors, track down missing paperwork, inadequate visibility, incorrect pricing, paying incorrect invoices (or worse – fraudulent invoices), inventory delivery delays through manual receiving processes, and more. So, if your business processes 10,000 purchase orders per year, that’s £1 million in administration costs.
Aside from the monetary costs, significant damage can be caused to business relationships. It takes a lot to settle a dispute and once resolved, the damage can be long-lasting. Once a big dispute is settled, the trust will not automatically resolve. It takes time. How much time will be spent looking over shoulders, investigating every last thing that a particular vendor, customer or 3PL does in the future? These costs are not quantifiable but you get the gist.
It doesn’t have to be this way
IoT technology is making strides forward. Achieving lower costs per unit tracked, maximising the data to deliver meaningful analysis and insights and end to end solutions such as Entopy’s Tracca Platform Solution making implementation seamless and easy.
By achieving greater visibility, stakeholders will be able to unlock a very powerful tool. A single platform providing multi-stakeholder transparency. This vision will see unnecessary administration costs significantly reduced, disputes settled in hours rather than weeks and prices more stable as suppliers won’t have to increase them to account for the discrepancy costs. Cleaner and more transparent business relationships. Sounds great, doesn’t it?