In my previous article, I shared a 7-step approach to analysing supplier distribution in terms of quantity and spend and showed why it is so crucial to implement it to assess and improve supply chain resilience. Today, I'd like to highlight the most common pitfalls that hinder this type of analysis and how to overcome them.
Incomplete or inaccurate data:
One common mistake is relying on incomplete or inaccurate data, which can lead to flawed analysis. To avoid this, ensure that you have access to reliable and comprehensive data from trustworthy sources. It is vital to carry out data quality control on a regular basis, as the information collected quickly becomes obsolete.
Biased selection criteria:
Another pitfall is using biased selection criteria for suppliers, which can skew the results. Ensure that your selection criteria are objective, relevant, and align with your business objectives. Avoid any favoritism or preconceived notions when choosing which suppliers to include in the analysis.
Ignoring qualitative factors:
Solely focusing on quantitative data can be a pitfall. It's important to consider qualitative factors such as supplier reliability, quality, and responsiveness. These factors can significantly impact the overall value and performance of a supplier
Lack of benchmarking:
Without benchmarking against industry standards or competitors, it's difficult to gauge the relative performance of your suppliers. Establish benchmarking metrics and compare your suppliers' performance against them. This will provide a more meaningful context for your analysis and help identify areas of improvement.
Neglecting communication with suppliers:
Analyzing suppliers without involving them can lead to incomplete insights. Engage in open communication with suppliers to gather additional information and gain a better understanding of their capabilities, challenges, and potential opportunities for collaboration. This will provide a more holistic view of your supplier relationships.
Overlooking the dynamic nature of the supply chain:
The supply chain landscape is constantly evolving. Ignoring this dynamic nature can hinder accurate analysis. Regularly review and update your analysis to account for changes in supplier performance, market trends, and business requirements.
Failing to involve cross-functional teams:
Analyzing suppliers' distribution shouldn't be done in isolation. Collaborate with cross-functional teams, such as procurement, operations, and finance, to gather diverse perspectives and insights. This collaborative approach will help avoid siloed thinking and ensure a comprehensive analysis.
As you can see, conducting a successful suppliers’ distribution analysis requires expertise and resources. If you feel you lack knowledge or a structured approach for this type of project, remember that we offer industry knowledge, advanced tools, unbiased perspectives, and support in implementing recommendations that will save you time while ensuring accurate information to improve your supplier relationships and performance.
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Nicolò MasseranoSenior ManagerItaly
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Nicolò MasseranoCome contattarmiSenior ManagerItaly