Building resilient and agile supply chains requires a platform that enables companies to take advantage of economies of scale when working with suppliers and contractors, while minimizing risk, disruption and disruption. shortages. A buy-sell solution can increase supply chain resilience while improving working capital and productivity.
In many cases, across multiple industries, supplier management is a complex task. A typical business has thousands of suppliers and relationships between them are difficult to manage. Adopting a buy-sell model that allows you to manage replenishment and inventory in a way that lowers inventory carrying costs while avoiding the risk of out of stock has great benefits.
With a buy-sell model, a company offloads its heavy sourcing complexity onto an outsourced expert. Under this alliance, the third party takes on much of the sourcing and procurement burden and even provides financing, so the inventory is not borne by the business, reducing the supply chain risk.
Here’s how businesses can benefit from a buy-sell solution:
Reduce inventory costs and risks.
Everyone wants inventory on hand in the event of a disruption, but they also prefer the just-in-time economy, which avoids tying up capital for long periods of time. A buy-hold-sell trading partner can buy inventory on behalf of a business and then hold it, sending it only to manufacturing sites when needed. When partners keep inventory in the same region as manufacturing plants, they benefit from short lead times, rather than trying to manage just-in-time from halfway around the world. A good example is the case of a manufacturer of computer servers. The company must maintain a good supply of processors and hard drives, but the demand for servers will fluctuate. It may be necessary to create a specific configuration one day and then switch to another the next. Instead of keeping sufficient inventory of different processors and hard drives or other components on site, it can partner with a third party that keeps the inventory on its own books just before it is used, thereby reducing risk and cost. storage while continuing to operate under a just-in-time model. Additionally, expert third-party capabilities such as order collaboration, forecast collaboration, and inventory management ensure that the supply chain is optimized while controlling costs.
Consolidate your supply base to simplify purchasing.
Dealing with thousands of suppliers is unlikely to be part of a company’s core competency. It takes a lot of time that could be better spent expanding into new markets or developing new or improved products. Why not entrust this task to a company specialized in supplier management? A single third-party managed services company in turn works with those thousands of providers and just charges a service fee. A well-adjusted supplier portfolio reduces the number of supplier interactions while ensuring uninterrupted supply. Outsourcing procurement not only allows the business to focus on core functions, but it also brings a level of expertise to reduce the number of suppliers for greater efficiency. A third-party sourcing service will act as a single vendor that works with the customer’s potential vendors, but can significantly reduce the number of vendors needed. The company is always able to work with this organized group of suppliers on design specifications and other requirements they need. There is no cessation of collaboration at the strategic level, but at the operational level the manufacturer does not need to work with so many suppliers.
Take advantage of scale advantages.
The buy-sell strategy allows the company to take advantage of its size to buy in bulk, without having to hold a large inventory. In a situation where the company outsources manufacturing, for example, suppliers will most likely purchase raw materials from tier three suppliers. But if the company deals directly with tier three suppliers, it can use its power as a larger organization to negotiate a better deal and have them ship components or raw materials directly to subcontractors. It’s a classic case of economies of scale and gaining greater bargaining power.
Reduce the balance sheet.
The buy-sell model offers opportunities to save money and reduce capital tie-up. A leading multinational high-tech company wanted to reduce inventory costs and facilitate cash flow, but without the inventory risk associated with just-in-time. supply chain resilience had to remain paramount and demand fulfillment rates had to be maintained. The company has moved to an inventory model where it purchases inventory just in time, but maintains optimal inventory with a financial partner to deal with ad hoc situations such as sudden fluctuations in demand. The tech company has offloaded more than $1 billion in monthly inventory value from its books, freeing up significant cash and reaching an annual value of $80-100 million.
Improve resilience and agility.
All of the advantages of the buy-sell model mentioned above combine to provide companies with strong, resilient and agile supply chain capabilities. Cutting-edge technology can be leveraged to offload complex operations, improve operational efficiency, mitigate risk, tighten collaboration, and scale to greater maturity.
How GEP Facilitates a Buy-Sell Model for Maximum Sourcing Efficiency and Increased Supply Chain Resilience
GEP provides end-to-end supply chain planning, visibility, collaboration and execution on a single platform.
Supplier relationship management must be very efficient. GEP gets rid of it using its vast operational platform. When you consolidate your supply chain and procurement activities, you reduce operational complexity, plain and simple.
GEP also offers the advantage of state-of-the-art technology. Its highly collaborative supply chain management platform is powered by GEP NEXXEa unified supply chain powered by AI Software. This state-of-the-art technology allows the company to take a innovative approach in working with suppliers, including forecasting, capacity checks, risk management, quality and cost management. Usually the cost is estimated by looking in the rear view mirror, but the GEP system calculates the cost by looking at future market trends. GEP currently monitors 75,000 indices, staying on top of the market in real time.
With GEP, customers achieve a crucial and necessary balance between lean efficiency, resilience and agility.
Additionally, GEP’s consulting services examine clients’ unique business needs and determine how to improve their efficiency at all levels.