Supply chain professionals are now told on an almost daily basis that their next challenge is to digitise the supply chain. A recent report from PwC says that computerising the process promises to “make the supply chain more efficient, agile and customer-focused”.
This is undoubtedly accurate, but advice on this typically majors on what is possible within the supply chain – the use of emerging technologies such as the internet of things and 3D printing to solve traditional, analogue headaches.
Such strategies are unlikely to be possible unless organisations also focus on digitising their supply chain management processes, particularly around collaborating with suppliers and monitoring their whole network.
The reality for most organisations is that far too many resources are sucked into manual processes that require human intervention where there are errors, inaccuracies and omissions. These processes are inefficient, generate new exceptions and errors of their own, and are also highly vulnerable to fraud.
Visibility and resilience
Moving to a more digitised model is a goal in its own right, as well as an enabler of a broader transformation. It’s the key to building a more robust and resilient chain that is flexible and adaptable – and to maintain the visibility that is crucial for the successful management of supplier risk.
Indeed, it is fashionable in procurement to talk about ecosystems – a broader environment where interconnectedness between suppliers and buyers works on many levels rather than in a linear progression.
The implications of that thinking are twofold: first, a failure at any point of the ecosystem can cause damage that ripples out to many other participants, often in unpredictable ways. Secondly, managing and monitoring the risks of such failures is a far more complex activity than in the past.
In which case, the manual approach is no longer good enough. Without a clear view of their entire ecosystem, organisations cannot hope to deliver the resilience they require to remain competitive – or even in business.
That view must be as current as possible, so that organisations are able to make key decisions on the basis of real-time information about the individual enterprises that make up their supply chain, the organisations on which those suppliers depend themselves and the interconnected impact between all parties.
Case studies of digital supply chain management
A Fortune 1000 insurance company recently ventured into digital for their IT vendor risk management initiative with a focus on streamlining corporate services. The issues were a lack of stringent evaluation processes in place dealing with supplier information updating, compliance monitoring and accounts payables 90 per cent of their workflow was on legacy systems where data was stored in different unstructured formats, and thus multiple excel spreadsheets.
The solution was digitisation, they needed a system that recognised and consolidated different file formats, verified vendor portfolio information and updated in real time with changes. They also needed ongoing surveillance with relevant benchmarks to ensure where they can derive savings and detect any security events before they occur. They embarked upon a three month journey with an AI fintech platform that solved those inefficiencies between them and their suppliers, ultimately increasing savings to the organisation and network visibility.
The platform used a single metric to categorise each vendor’s risk and the collective vendor population. It acted as a smoke detector for the insurance company’s IT supply chain. If a supplier was going to be late on a delivery, the buyer knew about it straight away and could make better informed decisions on their processes.
The use of this platform resulted in five per cent of the pool being identified as critical suppliers, highlighted opportunities to reduce accounts payable days for critical suppliers, consolidated information across innovation, procurement and corporate, reduced data processing costs, optimised staff time by 10 per cent and enabled greater accuracy, consistency and speed of communication for staff.
Microsoft is also working towards such goals. It reported back at the end of last year on the first stage of a long-term project to put digital technologies to work in the management of the supply chains and production lines that produce hardware ranging from its Surface tablet to Xbox, its gaming console.
The IT giant’s aim is to use business intelligence tools to generate much greater quantities of insight into how its supply chain is feeding production and shipping, so that risks can be addressed, along with under-performing areas. Even at the early stages of the process, with more automation and analytics tools still to be deployed, Microsoft reports significant time and cost savings.
SAP is also a major investor in this area, both in its own right and for clients, building tools such as the Asset Intelligence network to enhance collaboration and provide far greater supply chain visibility than ever before.
Data drives collaboration
The common theme in these endeavours is data. Without a constant feed of information from and about members of the supply chain ecosystem, it’s not possible to secure the level of visibility required, whether of individual suppliers or the network as a whole.
By contrast, VendorMach has a platform that enables organisations to leverage their own unstructured and structured data, supplier’s data, as well as significant external information and ERPs, which will put them in a much stronger position; with greater insights into suppliers’ operations, creditworthiness, credibility and resilience. This will ensure they are in a position to make decisions based on real-time monitoring.
Moreover, automating in this way will reduce the need for time-consuming and expensive manual interventions, freeing up resources for work that adds value. This is an opportunity for organisations to build much more collaborative relationships with their suppliers, which in turn offers the promise of increased resilience and reliability for all.
These sorts of processes may attract fewer column inches, but it should be at the heart of work that seeks to digitise the supply chain. Without real time visibility of your suppliers, it will not be possible to build a robust network capable of leveraging the benefits of further investments in new technologies and automation.
Chaney Ojinnaka, CEO and Founder, VendorMach
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