Understanding the Importance of Controlling Supplier and 3PL On-Time Delivery for Indirect Spend
Controlling On-Time Delivery (OTD) of GNFR purchases is a major means to protect and safeguard the enterprise’s valuable capital. Late deliveries and failures to deliver can negatively impact operations and prevent the on-time completion of mission critical projects resulting in huge losses. Gaining control of On-Time Delivery to mitigate these risks is critical.
What Is On-Time Delivery Control for Indirect Spend?
On-Time Delivery Control refers to the risk mitigation processes required to manage the timely receipt of goods purchased that fall under indirect spend. This includes adding visibility into all indirect spend categories, buyers, suppliers, and project types that keep the business operating but doesn’t necessarily contribute directly to revenue. Receiving Indirect Purchase Orders On-Time is crucial to completing projects on time, and keeping the enterprise operating at peak performance.
Not every type of business has the need to operate with a significant GNFR spend. For example, some service industries, such as accounting and advertising, do not usually have the demand for these large-scale purchases. But retail chains and large manufacturers do. And for those that do, indirect spend On-Time Delivery Control is crucial to on time project completion and operations.
Specifically, end-to-end On-Time Delivery Control is the ability to track all GNFR purchases by supplier, 3PL and on to the final destination.
Adding On-Time Delivery Control Reduces Indirect Spend Risks
Overall, source-to-settle and On-Time Delivery Control are two terrific tools that when implemented together can synergistically complement each other to effectively manage and control indirect spend.
Adding On-Time Delivery Control ensures you are effectively managing your indirect GNFR supply chain’s end-to-end risks. As the example below demonstrates, an On-Time Delivery Control toolset can provide visibility into each step of the end-to-end process and thus control it to ensure all risks are managed in real-time.
- Buyer submits order to supplier
- Supplier acknowledges order is receipted
- Supplier sends ship date and ETA for shipment
- Supplier ships goods from their facility
- Supplier sends shipping information
- GC (general contractor) is scheduled according to shipment ETA
- Shipper/3PL (third-party logistics) reveals status/location of in-process shipment
- Field manager receives shipment
- GC installs shipment
Why Is Indirect Spend On-Time Delivery Control Important?
As opposed to GFR (goods for resale), the number of GNFR spend categories, influencers and purchasers can be extremely large and diverse. And because many of these purchases are made outside of the purchasing department, it is easy to lose track of spending in this area. Additionally, the spend categories vary greatly depending on the business, making it crucial to pinpoint and manage. Since GNFR categories have so much inherent complexity, managing and controlling them can be that much more difficult, but nevertheless extremely important and mission critical.
The Benefits of Controlling On-Time Delivery
Of the many benefits of controlling On-Time Delivery, risk mitigation and increased savings are the most significant. The fact that many indirect goods are received outside the normal receiving function within a company, On-Time Delivery Control can significantly help mitigate and manage risks associated with ensuring these goods arrive at their final destination on time (e.g., without missing deadlines, incurring unexpected costs, or lost upon arrival).
On-Time Delivery Control delivers increased savings and efficiencies in several significant ways:
- decreases the amount of late shipments by highlighting delivery risks early.
- helps ensure that everything is being ordered correctly to decrease the chances of not receiving goods when needed.
- decreases lost inventory by tracking the goods through to receipt at the final destination, leading to a reduction in reorders due to confusion caused by lack of receiving data.
- reduces the amount of excess inventory by decreasing unnecessary reorders and facilitating costly disposition efforts.
An On-Time Delivery Control system fills significant risk mitigation voids not covered by complementary systems such as ERP, Source to Settle and Purchase to Pay. In fact, On-Time Delivery Control’s fit focuses upon the inherent risks from time of purchase until the goods arrive at their final destination. On-Time Delivery Control complements and synergistically enhances the other vital indirect spend tools.
In essence, On-Time Delivery Control systems transfers control of the purchase delivery from the Supplier and 3PL to the enterprise. By adding On-Time Delivery Control to Indirect Spend management businesses are able to mitigate more risks in real-time ensuring their GNFR shipments arrive on time. By implementing the right tactics, businesses can decrease costs, increase savings, improve performance and protect capital along the entire indirect supply chain.
Lumatrak provides a full range of real-time On-Time Delivery Control tools to help better manage supplier and delivery performance from order to the final mile of your indirect goods delivery. Provided in the cloud through its Software-as-a-Service (SaaS) offering and already connected to vast numbers of manufacturers and contractors, Lumatrak’s solution can be quickly implemented to complement and enhance any ERP, Strategic Sourcing and Procure-to-Pay systems.
To learn more about how a better GNFR-delivery management solution could save your company both time and money, contact the team at Lumatrak today.