Is technology the cure for future supply chain disruption?

By By Richard Hogg, Managing Director, JAGGAER
94% of Fortune 1000 companies saw supply chain disruption in the wake of COVID- 19. Some issues were inevitable; after all, this deadly virus took the w...

94% of Fortune 1000 companies saw supply chain disruption in the wake of COVID- 19. Some issues were inevitable; after all, this deadly virus took the whole world by surprise.

 Yet the damage would be less crippling if company supply chain management was
better equipped for the 21 st century. It’s shocking almost a fifth of organisations still rely on fax machines and paper for
procurement. That’s a huge weakness, especially when the world’s workforce is suddenly forced to work remotely.

Companies should take a hard look at company supplier management, seeing where solid data and digital tools could improve resiliency. After all, modern supply chain management practices give companies an edge when the world goes belly up.

Here are a few advantages:

Mitigate risk: Companies need a diverse group of suppliers and backup suppliers. Research from the Institute for Supply Management found almost half of US supply chain managers don’t have a plan in place to address supply chain disruption from China.

That’s just asking for trouble. No one needs the stress of scouting, selecting, and on-boarding new suppliers when global pressure mounts. The right data helps you build diversity into your supply chain, spot limitations, and discover potential disruptions earlier. That cuts your reaction time, ultimately making you far more resilient.

Control spending: More than ever, companies need to keep spending under control. And one of the best ways is to make procurement easy for internal staff.

Some companies use digital “chatbots” that steer staff to preferred suppliers and relevant contracts already in place. This keeps off-contract spending to a minimum. And as an added bonus, it helps inform new policies and supplier choice. It’s also easier to control spending when policies are flexible enough to match changing business environments.

One example is the University of Dayton, Ohio, which cut down requisitions by 51% in one week by introducing a new activity code for pandemic-related expenditures. That flexible control makes fiscal management simpler, especially in chaotic times.

Save money: One of the most compelling reasons to modernise and digitised processes is cost savings. After all, chief procurement officers say cutting company costs is their biggest pressure, according to Ardent Partners research. That’s why it’s a wise investment to digitise supply processes wherever you can. A company with $10 billion (£8.04 billion) in annual revenue could see up to $16 million (£12.8 million) in savings by making spend management more efficient.

Increase agility: Some companies are notoriously slow to get from source to pay.

Digital processes, backed by sound data, make it easier to act with speed and confidence. That speed drastically improves a company’s ability to find great suppliers, and equally to be a great supplier. One example is the UK Department for Education (DfE), which recently put out a tender for an IT platform that can process home working equipment orders.

The tender, worth £500k, gave suppliers just 48 hours to submit bids. It also stated the vendor would be chosen within 24 hours after bids close, with the expectation the vendor would have the platform ready to go the next day.

Speed matters in a competitive marketplace.

Automate tasks: New technology makes it easy to automate the more tedious parts of procurement that slow staff down – like processing paperwork and monitoring processes.

Automation with artificial intelligence (AI) is killing that monotony. It uses previous purchases and user preference to make informed decisions automatically. Some supply chain professionals tell me they hate the idea of automation. They fear robots will take over their jobs.

It’s true automation technology is shifting some job responsibilities. But it isn’t about taking control; it’s about giving staff more control. Automating repetitive tasks gives supply chain leaders the freedom to focus on strategy. Companies need that robust strategy more than ever as they prepare for the post-pandemic world.

Finding the cash

Most procurement teams would love to swap the fax machine for modern processes and equipment. What’s stopping them? Company budget restraints, our research shows. And finding more budget seems even less likely as companies take drastic measures to stay afloat.

However, the widespread disruption might be the push companies need to prioritise modern supply chain management.

Going forward

It’s too late to plan for this crisis, so it’s time to prepare for the next one. Here are questions to ask:

  •  Should we change the way we assess suppliers?
  •  How diverse is our supplier base?
  •  Do we need to change supplier contracts going forward?
  •  Should our continuity plans change?
  • What technology do we need to manage future disruptions?

No one can predict the next global crisis. Yet those with modern supply chain management processes will be more resilient the next time around.


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