The traditional supply chain is not really optimal in today’s global and technology-centered economy. Instead, think digital supply network.
You’d have to be living in a cave and off the grid for the past decade not to notice the enormous changes that have taken place in procurement and the supply chain. A recent article in CFO by Kris Timmermans, senior managing director for Accenture Strategy, talks about how digital disruption is affecting every aspect of business, especially in the supply chain.
The article explains that those in the supply chain and throughout the organization need to develop an entirely new mindset. Supply chain leaders and stakeholders should embrace the supply chain model as a simple way to create, procure, and deliver products to customers and changing it into an intricate, integrated, and interconnected digital supply network that goes well beyond the functionality of the traditional supply chain.
In today’s customer-centric universe, whether it’s B2C or B2B, winning companies are faster, flexible, and able to anticipate customers’ wants and needs. It’s nearly impossible to accomplish this goal when a company depends on paper and manual processes to ensure customer satisfaction and executive level awareness. In a survey of 400 senior supply chain executives, Accenture Strategy found 85% of those surveyed are introducing new digital capabilities into their operations.
The CFO article makes it clear that digitizing your processes on a piecemeal basis while leaving in place paper and manual processing will not offer the many benefits you should be realizing. The need is for a full digital supply network and to illustrate this, the author discusses how digital trendsetters, those he defines as top performers in profitability and growth, build their supply network:
- Trendsetters set up the digital network “around the intersection of suppliers, products, and customers,” ultimately “providing buy-anywhere, collect-anywhere, return-anywhere capabilities via flexible channels.”
- Trendsetters invest in all aspects of digital technology including analytics, mobility, and the cloud. The also invest in the talent necessary to build upon this with a forward-looking focus on artificial intelligence, the industrial internet of things (IoT), and smart products.
- Trendsetters take collaboration to a new level, one that includes not just those internal functions (like procurement and AP), but also all external stakeholders.
Although the Accenture Study (and the article) deals with the full capabilities of the supply chain, including sourcing raw materials, manufacturing, warehousing, and delivery, here at AmeriQuest Business Services, we also know how valuable the digital network is to those in procurement responsible for building good relationships with suppliers, purchasing product and services, and working with accounts payable to ensure that vendors are paid in a timely manner.
However, the digital network helps procurement go beyond just buying and has transformed the position of procurement from purchasing agents into strategic players. The digital network of an e-procurement platform connects all stakeholders in the transaction process, from procurement to supplier to accounts payable to treasury, giving each of the entities a clear, real-time visibility into the status of the order and the payment. This has served to eliminate the number of disputes and the amount of time spent on resolving them, a real boon to the accounts payable department.
This visibility also gives procurement an advantage when it comes to supplier negotiations, optimally resulting in better pricing and terms. It offers accounts payable the flexibility of developing a more strategic payment schedule. And it gives finance executives the information they need to better manage their working capital. An additional benefit and a highly strategic one resulting from the data in the digital network is the ability to forecast sales much more accurately as well as the ability to potentially develop new products or eliminate existing ones based on that data.
For companies that are looking to grow while increasing both productivity and profitability, building a digital supply network would seem to be an obvious move.