3 Signs You Need To Automate Your Packaging Vendor Management

According to a report, 39% of companies want to improve visibility in their distribution and operations. That's why companies are tripling their focus on improving vendor management.

Most packaging vendors still work manually and often offline. These outdated processes could be hurting your bottom line on a much larger scale than you think. So it's time to take a deep dive into your supplier management practices.

Let's examine 3 signs why you need to automate your packaging supplier management.

1. You Are Dealing With Incorrect Data

The seller called to say that your order has been shipped. After a week you are still waiting for delivery. Maybe the roads are blocked due to external factors, causing problems in transportation.

Over time, managing multiple vendors includes organizing purchase orders, invoices, and inventory across locations. It also requires more cost and time to deal with price negotiations and supply chain execution for different locations.

To avoid such delays, you must constantly monitor the sellers. More manpower is spent to fulfill orders. If your dealer is located elsewhere, calls may not be made. The quality of the packaging material may also deteriorate.

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How Can You Automate This?

Even managing multiple packaging suppliers in emails and calls can cause chaos.

A digital procurement platform can help you identify and discover local vendors to reduce costs and time. It also means you have to deal with a single point of contact. This will greatly reduce the chances of any mismanagement.

You can track multiple orders in real time on the platform. Moreover, you are informed at every stage from production to shipment and receive proof of delivery. View the status of shipments and find out when and where an order was delayed.

With such reliable insights, you will soon be able to simplify your supply chain and improve packaging supplier management.

2. It takes a long time to replenish stock.

When supply of packaging material decreases, you can alert vendors of your requirements. After accepting your order, they start production. The next stage includes quality checks and shipping to the desired location. When all of these come together, it can take up to 30 days.

For example, you did not stock enough packaging material. You are suddenly selling more than you expected. In these cases, a quick response from your packaging vendor can save the day.

However, if it takes 30 days or longer to replenish stock, you may lose in sales and incur heavy losses.

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How Can You Automate This?

Establishing an open PO process with your vendor to shorten the purchase lead time.

Packaging material is usually ordered in high volumes and through SKUs. This leads to multiple purchase orders, delivery dates, and destinations. In case of need, an open PO can shorten the replenishment period by 5 days.

Open POs can also eliminate any error scope because jobs can easily get lost or overlooked. You do not have to repeatedly order the same packaging materials.

3.Your Inventory Management Suffers

According to a recent report, 20-30% of a company's total inventory cost is allocated to stock carrying costs.

Like other products, the packaging material inventory takes up space in the warehouse. Storage and maintenance of packaging material can increase your costs.

Reasons why your inventory management is inefficient:

Irregular inventory checks

Ordering excess stock

Slow moving inventory

Excess inventory

How Can You Automate This?

Defining safety stock levels and communicating them to your vendor can help you build a leaner packaging supply chain.

Needless to say, this process can be simplified by regularly checking your stock levels. You can get useful information with inventory audit reports. You will be able to determine inventory turnover, slow moving stock, and more.

3 Signs You Need To Automate Your Packaging Vendor Management

If you have historical data, review these as well to understand trends. Then define your stock levels according to the picture above. When your stock levels reach the yellow stage, your dealer will immediately know when to start production.

If you adopt a consumption-based inventory model, you'll eventually eliminate dead inventory and lower overall costs.

The Takeout

Communication is the key to seamless vendor management. Technology-enabled vendor management can provide you with clear data and improved services. Ultimately, automating these processes can make your business healthier.

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