As we previously mentioned in our How Do Your Suppliers Measure Up? post, there are many ways manufacturers hold their suppliers accountable. We recently completed our annual Purchasing and Manufacturing Survey (PM Survey) of our Member companies and there were some fascinating results about how today's manufacturers are measuring their suppliers. The participants agreed, you still must maintain the standard three metrics of quality, delivery and cost. But companies are also placing growing importance on flexibility to respond to unexpected demand as well as responsiveness to change requests.
There is no company on the planet that accurately predicts each customer's demand. As you wade through complex layers of business, you'll constantly find yourself playing the telephone game, all the while being placed under a microscope by your customers. Even though the supply chain level you are operating in will vary from time to time, at the core, you'll always be in the thick of customer and supplier relationships. And whether it is a retail store, OEM or end-use, the unforeseen will happen and demand will ebb and flow.
No one can afford to keep large amounts of inventory on their shelves. It's like staring at your bank balance but having no access to an ATM -- money just sitting there that could have been used on other parts of operations. So how can companies increase their agility and respond to the unpredictable? Having reliable historical data is a first step, but having the ability to analyze and forecast from that data is just as essential.
Our recent PM Survey saw that over 50% of our Member companies have spend analytics and reporting in place in their organizations. Another 15% are working to implement this technology over the next 12 to 24 months. This critical data can help procurement teams drive towards lower inventory, while still meeting their customers' needs without any delay. Not surprisingly, 75% of respondents to the survey consider analytical skills as the most important talent to creating strength in their procurement team.
Even the best technology and most talented professionals cannot generate a 100% accurate forecast. It's always going to be an educated guess. Having a great relationship with both your customers and suppliers will allow you to nimbly react and retain business, even in the face of planning failures that leave you temporarily out of stock. The Members who participated in our survey look for flexibility from their suppliers, especially during moments of unexpected demand. This outranks even technical support and other business services that many suppliers offer, as the most desired quality by manufacturers today.Tight and in-sync supply chain partnerships are essential to making businesses run to full potential. And open communication is the key for both sides of any successful relationship. Although we all put massive amounts of energy into it, no one will be perfectly accurate when projecting their business. Organized teamwork throughout your supply chain will quickly solve problems as they arise while creating the level of partnership required for success, no matter how your company measures it.