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Why Digital Collaboration is the Future of Supplier Relationships

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As we settle into the new year, our Sourcing Summit Companion Report looks ahead at ways to optimize processes and performance.

Suppliers are the “make” or “break” of your global supply chain. That’s a serious claim, but think about it: the products you sell are the lifeblood of your brand. Every stitch, measurement, paint swab and fabric is meticulously crafted to bring your vision to life—and ultimately, to generate a profit.

That means the interactions you have—or don’t have—with suppliers leaves a serious impact on your bottom line. Is that something you would want to put at risk? Yet for many importers today, that’s exactly the risk they’re taking.

The current state of importer-supplier relationships

Recent years have brought several challenges—including trade wars and tariffs—and the pandemic only heightened and exposed many of the problems that have been lurking for years. Those circumstances, combined with the recent inability to meet suppliers in person, have made collaboration more important than ever.

In the current climate, how can organizations preserve and improve supplier relationships to ensure products ordered match those received? How can businesses preserve the DNA of an order that takes at least four months to complete?

The truth is, those questions are difficult to answer right now, largely because most of the import supply chain is offline—that is, still managed by disconnected, unsophisticated, legacy systems (or worse, email and spreadsheets) that don’t function together or provide an integrated view of the supply chain.

Research shows that the initial 80 percent of the import supply chain (known as the first mile) remains highly manual and siloed. That reality prevents companies from achieving operational efficiencies and maximizing sales.

A decade ago, the supply chain industry underwent a significant transformation in the final mile (the remaining 20 percent of the import supply chain). At that time, competitive pressures forced businesses to move primarily to digital platforms, significantly enhancing visibility and the customer experience. Why couldn’t the same be said for the first mile?

Succeeding with an online supply chain

The Amazon effect made it table stakes to have full visibility, transparency and efficiency in the order process—or at least, to claim it. This concept is no different between importers and suppliers.

That’s why it benefits both suppliers and importers to shift most collaboration efforts online. Beyond the obvious convenience and accountability, there are significant factors that benefit from moving online, including: ESG, workforce satisfaction, supplier relationships, resiliency and sales.

Each of these broader sectors require a digital underpinning to meet modern organizational needs. For example, to meet ESG requirements, five conditions must be met: supplier connectivity, training and testing, inspections, reporting and immutable validation (that can only be achieved through innovations like blockchain technology).

However, if there is no online supplier connectivity, none of these are practical.

That’s why the Mercado team developed a platform that enables supplier collaboration and real-time production management, helping enterprises to harness the benefits of a unified business. Designed by importers for importers, Mercado is an import order management system (iOMS) that allows companies to buy like they sell. Mercado does this by connecting companies to the people who make and move products and automating the supply chain to create efficiency and remarkable outcomes.

How relationships impact compliance

By building strong supplier relationships, importers can improve the three key areas of compliance:

  1. Social compliance—The steps and measures put in place to ensure the safety, equality and fair treatment of staff, working conditions and environment that, if not followed, could hurt humans and/or the planet. This includes the lives, communities and local area that exists around a business’ services and supply chain operations.
  2. Regulatory compliance—The laws and requirements set out by local, regional or national governments to oversee how products are made and sold in specific regions, typically focusing on the actions involved in the sourcing and manufacturing of products. If regulatory compliance isn’t followed properly, it can impact your bottom line through fines and unforeseen costs.
  3. Supply chain compliance—The needs and specifications put in place to ensure the accurate and timely delivery of products through the supply chain that, if not done properly, could impede the flow of goods or even lead to fines from customers for not meeting their requirements. This form of compliance typically covers things like packaging, labeling and container loading specifications.

Put suppliers first in your supply chain strategy

Of course, more robust and collaborative supplier relationships impact a lot more than just compliance.

By leveraging an online platform that connects internal departments with suppliers and vendors, importers gain benefits including native language translation, instant chat and messaging, easy review of progress and milestones, visibility into the entire production process, and vetting to ensure all conditions are adequate and appropriate. Additionally, changes against POs can be logged, tracked and verified.

All of these features lead to better relationships, enhanced visibility and greater accountability between all parties.

To learn more about Mercado Labs, click here.

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