Challenges Facing Manufacturers
Manufacturers (including fabricated metal, food processing, machinery, plastics and rubber, and transportation equipment) rated supplier management at the top of their concerns while emerging and growing risks in cybersecurity, competition, labor, pricing, regulations and international operations are also keeping manufacturers up at night.
Manufacturers have millions of dollars tied up in resources like machinery, tools, personnel, products and more. While these resources are ultimately necessary, they also open up manufacturers to greater levels of risk.
The capabilities, reliability, and affordability of each vendor can have a substantial impact on your company’s bottom line.
Consequently, vendor management is effectively risk management, and an essential business process in protecting your bottom line, building value and giving your company a competitive advantage in the long run.
Organizations continue to reference relevant regulatory guidance and follow the pillars of vendor management when managing risk and vendor relationships.
The 6 pillars include:
- Vendor selection
- Risk assessment
- Due diligence
- Ongoing monitoring
- Contract management
The vendor management process helps you achieve these goals through:
Billing Optimization and Analytics, Contract negotiation,Vendor relationship management, Risk Management and Document Management.
Top 25 Risk Factors for Manufacturers include:
- U.S. and Foreign supplier/vendor concerns and distribution disruptions
- Federal, state and/or local regulations
- Labor concerns/underfunded pensions
- Competition and Consolidation in marketing
- Commodity/raw material prices
- General economic conditions
- Environmental regulations, laws and liability
- Treats to international operations and sales
- Breaches of technology security, privacy, theft, computer crime
- Currency risk, including exchange, fluctuation
- Inability to manage, complete and integrate current or future M&A, joint ventures, divestitures or other transactions
- Ability to maintain operational infrastructure systems, implementation of new systems
- Business Interruption (natural disaster, war, conflicts and terrorist attacks)
- Failure to properly execute corporate strategy
- Access to capital or liquidity
- Less demand for products
- Ability to develop and market quality products that meet customer needs/innovation
- Legal proceedings, litigation
- Restrictive international trade policies
- Product quality or contamination issues, recalls
- Attract/retain/motivate key personnel and management
- Customer/vendor/partner’s ability to finance, access to capital
- Anti-corruption/anti-bribery laws and regulations, including FCPA
- Intellectual property or trademark infringement
- Insurance costs and potential losses due to uninsured liabilities
- Fluctuations in fuel/energy/oil/transportation costs
- Accounting standards, including internal controls and financial reporting
Decision-makers and security personnel at manufacturing organizations need to have a holistic understanding of the risks that can potentially impact their operations, as well as knowledge of how to effectively mitigate those risks to protect their assets and their brand, and to keep operations running smoothly.
LIMITLESS offers a fully managed solution to ensure you are “paying for what you are receiving”. Ensuring contract terms are met as well as compliance standards. Tracking any potential risks, optimizing your billing and managing all contract and agreements in one central software solution.
Outsourcing vendor management to a third party will also help standardize processes; and consistency helps enable the transparency essential to effective governance. This helps to alleviate flawed data, and costly mistakes.
Our software will not only house every contract, service agreement, warranty or renewal agreement, but we also manage negotiations for better rates and terms saving your business from unnecessary fees and costs while maintaining quality standards. If you have questions regarding how to manage vendor contracts/agreements or would like more information regarding our fully managed vendor management solution contact LIMITLESS at (866) 504-4050.