Interview: Eliminating paper in the supply chain with Esker
Historically, companies have al...
Paperless processes are freeing up resources and driving efficiency in procurement. Esker’s COO Steve Smith explains
Historically, companies have always spent a lot of time and money moving paper around. And if any aspect of that business involves supply chain management, then the inevitable large amounts of paperwork can result in a supply chain that’s sluggish and inefficient. In efforts to streamline, companies are increasingly looking into implementing digital technologies in their supply chains, which enables them to vastly increase the speed of processing while also going paperless.
It is actually possible to quit paper completely, which has numerous positive knock-on effects, according to cloud-based document process automation solutions provider Esker. Along with doing away with the need for paper, automating every phase and type of business information exchange enables companies to reap a host of benefits in a short space of time; Esker says its solution can deliver a measureable ROI in as little as three to six months.
The company, which launched as a software vendor in 1985 in France before branching into document automation, operates across Europe, North America, Latin America and Asia Pacific, and counts global heavyweights Ericsson, Hyundai, Heineken, John Deere, Kimberly-Clark and Microsoft among its 80,000 customers and millions of licensed users. Esker’s technology enables businesses in numerous sectors to automate manual inefficiencies and low-value tasks in their order-to-cash (O2C) and purchase-to-pay (P2P) processes.
Steve Smith, Esker’s Chief Operating Officer, says the company’s solutions are about “keeping the supply chain rolling and getting goods and services out as quickly as possible”. He adds that cloud-based process automation enables orders to get into the ERP quickly, invoices to be issued, purchase orders to be managed, and invoices to be approved and paid as quickly as possible – all without any data being inputted manually or paper being printed.
“We can get orders processed sometimes 80% to 90% faster than they could do manually, so they're getting orders in and fulfilled quickly, keeping customers happier,” Smith shares.
Speed is something that has always been a priority in business but never more so than today, at a time when customers simply don’t want to wait. Younger generations have grown up alongside the digital boom, where everything is available instantly and services have grown exponentially.
“We've had many customers tell us that it's been part of their strategy to fulfil orders the same day or within a 24-hour period. Aside from a competitive standpoint, they may offer certain goods and services that mean they have to get their products out faster, and we're able to facilitate that,” Smith says.
“On the accounts receivables side, you're gaining efficiencies by being able to send invoices in a format where your client can better work with them, so the customers of our customers can accept or request their invoices in electronic formats. If they still want them via paper, they can get them via paper, if that's how it works better in their AP (accounts payable) process. It’s the same on the inbound or the P2P; our customers are seeing benefits by having their spend approved before they actually make it, not after the invoice is coming in. Having all the proper workflow to make sure the spend is acceptable means when the invoices do come in from suppliers, they're paid much faster as it's pre-approved.”
As well as reducing the time it takes to fulfil orders, going digital reduces the ecological impact a company has. It’s not often you can argue that the most efficient process in any given scenario can align with the best environmental decision, but Esker certainly makes a strong case for that, when you consider that it’s enabling a customer to send and received tens of thousands of digital documents each year, which reduces CO2 emissions and the need to cut down trees.
“We certainly know that we are reducing the amount of paper in companies and that there are environmental benefits to it; we know we're saving trees,” Smith says, before adding that, unlike Esker, saving the planet has not been a key motivator for companies.
He admits: “Customers seem to care more about the cost-savings. We actually talked about doing more campaigns around green initiatives in the past but, surprisingly, it wasn't as high of a priority within companies as we thought it would be. I was actually quite shocked.”
Something that will always be popular, however, is harnessing technologies that enable human resources to be freed up for more valuable tasks, as it delivers salary savings while significantly minimising the risk of human error.
“The goal in many cases is to reduce human interaction and automate processes to the highest degree,” Smith says. “Then you can find other reasons to use those humans. With order processing, many customers are repurposing people that were interacting with those orders coming in to more valued processes.”
Instead of workers being pushed out by automation, they can be redistributed to areas that make better use of human skills, though there still exists an opportunity to trim down the wage bill if required, Smith explains.
“Where we may see some reductions from the human perspective is where overtime is reduced greatly or they might not need to hire part-time individuals to handle peak period,” he says.
Turning his attention to Esker itself, Smith discusses exciting digital opportunities he wants to seize this year surrounding new legislation.
“We're always looking at ways that we can enhance our solutions and certainly we are now with the B2G (business-to-government) initiatives in the Americas,” Smith shares, referring to e-invoicing becoming mandatory before the end of the 2018 fiscal year for companies in the US that provide goods and services to the government.
“We've hired a team to really focus on that in the Americas because it wasn't as big of an initiative here as it has been in Europe and Latin America. We think, with the B2G initiative starting in the Americas, we could see a real spike in growth for electronic invoicing initiatives here. We're going to hopefully see more activity around our accounts receivable solution.”
Moving to Europe, EU directive obligates all contracting authorities to be able to process e-invoices by the end of 2018 and a major e-invoicing initiative launched last year, requiring an interoperable, common standard for B2G trade in Europe, with a deadline for implementation of April 2019.
Smith adds: “We deal with all compliancy issues in Europe and Latin America, and other parts of the world, including the B2G initiatives. We can format our documents to meet all the different compliancy issues that are out there. On the B2G initiatives, we have to tailor the way the invoices are formatted, specifically to the different government initiatives. In Latin America, we've got to make sure the government sees invoices before they're sent out to suppliers, and we’ve got to make sure we're showing that VAT is being collected with the different compliancy issues throughout Europe.”
In terms of what’s on the horizon, promising to disrupt the global supply chain management industry, Smith sees advancements in robotic processing and AI, revealing that this is a “big part” of Esker’s solution.
“Through AI and robotics we are able to automate things faster and adapt to everybody's environment. Even though what we do is similar in every company, in many cases there’s nuance involved with orders and invoices but no matter what kind of document we're dealing with, having robotics and artificial intelligence built into our solutions enables faster adaption to environments. There's a lot of talk around this right now and in the next few years we’re going to see huge advancements to speed up and enhance the whole supply chain management process.”
While discussing companies’ interest in embracing digital documents over paper documents, Smith tells Supply Chain Digital that he experienced a level of resistance to even going paperless until fairly recently. He cites younger generations entering the workforce as a key factor in driving a change in mentality.
“I've been talking about paperless for probably 30 years and it's really been in the last five years that I've started to see many of the things that we talked about way back when, really starting to take hold. The younger generations are used to using electronics – laptops, tablets, phones – and that's the way that they are used to doing their daily activities. To receive something via paper seems odd to them and, quite frankly, they're forcing people even in my generation to think differently,” he states.
Asked if there is ever a need for paper, he concedes that he does find it useful to have paper documents occasionally – to look over when he’s travelling for instance – but believes “the need for paper has greatly diminished”.
“We've all learned to get used to paperless ways of communication and we're finding that it's just an easier way of doing things,” he concludes.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”