Part 2: Helping procurement to become more strategic in supply chain businesses
In the first part, I gave some background to spend management. In Part Two I’m going to look at how you put this into practice. Integrating cloud-based spend management with on-premise ERP systems can make the most significant impact on the bottom line.
The first step is to understand the processes that are currently in place and how they are being used within the organisation. This will help to identify how much control over spend there is right now, and will provide further opportunities to improve efficiency and spend management further.
In contrast to on-premises legacy ERP systems which tend to be highly prescriptive, cloud-based spend management systems can recognise the different needs of users by collecting data to improve visibility and control of spend.
Providing tools with a familiar user interface that people truly use with delight rather than those designed to meet an individual need of the business can make the greatest single difference in determining the level of adoption of a system. This in turn means more spend comes under management rather than going through unauthorised use of expenses.
By learning from the world of consumer online shopping sites, enterprise applications can be built to be just as easy and consumable by everyone within an organisation, rather than just specific members of the Procurement team. This ease of use is vital, and addresses the real issue of why spend management is often so fragmented.
By creating a unified approach to spend management, procurement teams automatically become more strategic right across the supply chain as well. Once there is more visibility of costs and greater control over spend, it is possible to focus more strategically around how a business approaches procurement.
This might include looking at supplier portfolios, reducing the number of suppliers to achieve more economies of scale or diversifying a portfolio to guard against risk. In other cases it could mean re-structuring the relationship with supply chain organisations to reduce costs in such a way that the suppliers win as well, by negotiating mutually amenable payment terms.
Dealing with ERP
The next step is to look at how spend management and ERP systems interact. If ERP is the central nervous system that runs the business, spend management is the sensory system that connects ERP with the end users in an organisation.
After email systems, requisitioning and expense management systems are the most ubiquitous platforms used in an organisation and are the vital link between the ‘end user’ and the ERP system. Integration is often complex, particularly where multiple systems exist in parallel due to growth through merger or acquisition.
This complexity is where using the cloud comes into its own. Implementing cloud-based spend management systems can help with ERP integration as these systems by nature are designed to work with any and all ERP applications, whether they are on-premise or in the cloud themselves. However the real value comes from streamlining and automating the flow of data from invoices and purchase orders into the ERP systems that they apply to.
The opportunity for companies considering cloud is the speed with which ‘time to value’ can be achieved. The evaluation and implementation phases for cloud-based systems are significantly less than on-premise alternatives.
Rather than taking eight to twelve months for a traditional evaluation process alone, companies can now instead complete a full cloud implementation in just four months. This represents a dramatic change and significant benefit to the business. Cloud solutions that are faster to deploy and more nimble to develop can help extend the value of the sizeable investment that companies have made in their ERP implementations.
The adoption of cloud doesn’t mean the disappearance of on-premise systems. Indeed, ERP will continue to be based within company data centres for the foreseeable future, not just due to initial investment but also because of the intellectual property and knowledge that they represent.
Automation of spend management is something that can be done in parallel or well in advance of an ERP migration, especially as cloud computing projects have less internal dependencies and are proven to deploy faster than ERP projects.
As companies seek to improve their spend and get more value from their investments, bringing together cloud and ERP represents an eminently logical step as part of the natural evolution for companies intent on optimising their supply chain operations.
In case you missed it, check out part one here.
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.