By: S.Suren
In my previous post I listed out a few important things about SCM and the basics that need to be followed to build a efficient Supply Chain Management model. In relation to that post I would like to discuss the importance of SRM (Supplier Relationship Management). This is not a very widely spoken about subject simply because CRM has taken the spotlight away from this since the golden rule “customers are king” is more prominent in any industry and thats why the sources of supply have not been given that much of attention than the receiving party, the customer.
However, the impact of a good SRM model would definitely help in providing world class customer service. So then, let’s look at SRM in a little more detail in the context of the Apparel Industry.
SRM is more likely to play a vital role in the manufacturing companies and especially those that have very complicated products, and this is exactly what the AFS Industry is all about. Given the unique fashion needs of each and every individual it’s only apparent that this leads to complex BOM Structures that go into producing the garments that caters to these needs.
Given that fact, it’s likely that there are many suppliers that the manufacturing company will need to work with in the most efficient manner to make sure that they receive the right materials at the right quantity and quality to be able to produce quality garments and deliver them to the market at the right time.
In the AFS Industry even a simple BOM (Bill of Material) Structure for a garment would have many different components in it, for example, the button, the thread, the elastic, the embroidery material, the fabric, the embellishments etc etc.
So then how does that SAP Standard R/3 and AFS Solution caters to these needs, below is a listing of some of them:
• Sorting and Vendor ranking criteria – This option in SAP AFS proposed the best vendor to assign the purchase requisition to , based on the criteria’s specified in here.
• AFS Specific Criteria for Vendor Ranking: These include criterias such as Factory Status, Complexity Factor and Lowest ‘FOB’.
• Ability to use Fixed Criterias (AFS Enhancement available) – Using this option you can also rank and maintain the best vendor to buy from taking into account criterias such as , vendor capacity, quotas the vendor is subject to and political restrictions placed on vendors that are from a particular region.
• Complexity Factors – using this option you can judge the extent to which the vendor has the ability to be able to produce a material that requires complex production steps.
• Route Determination (AFS Enhancement available) – Even the move time, lead time and shipping types can be maintained.
• Subcontracting – With the inclusion of being able to set preference sub. Indicator for those vendors who use provision components in the material that is supplied to you.
So there you go, these are just some of the functions available. It can be argued that the information from transactions done with suppliers can be retrieved and reported in tools available in modules such as BI and FI. Perhaps in my future posts I shall discuss on these aspects.
Hope you found this post informative. Feel free to contact me on ssurenlk@msn.com if you have any queries.
For more information of features avaible on supplier management, click here.
Have a nice day!!
