Supply chain management is undergoing rapid digital transformation. The old, manual processes which hold companies back are making way for technologies like cloud computing and advanced analytics. With so much opportunity, however, it can be difficult to prioritise.
To help get the most out of current supply chain innovation and maximise profits in 2019, here are three areas of supply chain technology which will can have the most impact on your operations in 2019.
- Maximise the value of your data using advanced analytics
The cornerstone of many supply chain management technology programmes is standardised and effective data management. This enables the application of advanced analytics which unlocks the nascent value in your ERP data. Research from the Hackett Group, shows that 66% of supply chain leaders believe advanced analytics will be critically important to their supply chain operations in the next two to three years.
But, before you can start implementing advanced analytics, it’s important you consider data standardisation. This can be an extremely resource intensive procedure and requires specialist data science expertise. In the cut and thrust of day to day management, carving out the space to make these important investments in your data can be extremely difficult. This is one of the biggest barriers for companies looking to embrace the data revolution, leaving many sitting on a wealth of data which they cannot use.
However, help is at hand. There are now a number of specialist third-party services which can provide the additional expertise, manpower and technology to build this data foundation. In addition, ‘plug in and play’ data analytics solutions can accelerate you towards realising the value from your data.
Data standardisation is the first step on this journey, and the insights gained from advanced analytics make the original investment worthwhile. The simple step of talking to a specialist vendor will help kick off your digital transformation in 2019 and beyond.
- Increase visibility across your supply chain
Supply chain visibility is a major pain point for firms, despite being mandatory in some sectors and becoming increasingly important in every business. Deloitte research shows that 65% of procurement executives lack visibility past their direct suppliers. Yet, with ethical sourcing of products an increasing concern for consumers, understanding the provenance of goods has never been more important.
Cloud-based computerised shipping combined with tracking technologies can provide accurate, real-time visibility across the supply chain. These tools help you keep an eye on a supply chain by consolidating all of its aspects into one place. They cut the time and resources spent on shipping, receiving, tracking and compiling order data. Furthermore, disputes between shippers and carriers regarding the condition of the goods shipped are reduced as both have real-time access to the data.
Adopting new cloud technology early can help you get ahead of your competitors in 2019 - evidence suggests early adopters of new supply chain technology outperform their peers and deliver a better service to their customers.
However, it is not all plain sailing. Requesting visibility from suppliers over multiple tiers of the supply chain represents a major investment and bears significant cost. Buyers have to ask their suppliers to join new platforms and integrate their processes and data, which is easier said than done.
Often these investments come with the development of a stronger and more strategic relationship with suppliers. By providing your suppliers with support, such as early payment to help improve their liquidity position, they will feel more able to invest in their own processes and more encouraged to do their bit.
- Pay your suppliers faster
Slow payments came to the fore in 2018, with high profile companies such as Carillion and Patisserie Valerie going under, leaving thousands of suppliers out of pocket.
However, the problem is bigger and goes much deeper than these few isolated cases. According to PwC’s Working Capital Report 2018/19, the last 10 years have seen the extension of payment terms by most buyers all over the world.
Paying promptly isn’t just a matter of fairness to suppliers, it’s good business. According to data from AgOS, the financing costs of suppliers throughout the supply chain can be as much as 20% of the final production cost.
Smaller suppliers are often the ones in the supply chain that have to wait the longest to be paid, despite needing capital the most. This is not in buyers’ interest. When strategic small suppliers face liquidity problems, the normal negotiation leverage that the large buyer has is eroded, because an unexpected change of suppliers can cost a lot of money.
Cash is a priority for buyers and the costs and risks associated with changing supplier can increase to the point where they are forced to step in and verticalize, acquiring suppliers in the chain in order to keep their business running smoothly.
Not only do slow payments ramp up costs, they create reputation risk for the business. The UK Small Business Commissioner, Paul Uppal, announced in early 2019 he will name and shame the worst large payers.
Paying faster means avoiding bad headlines and opening the opportunity for better deals from suppliers. With the use of ERP data and smart technology, companies can enable even their smallest suppliers to be paid on receipt of invoice in a low-risk, automated and profitable way.
By using smart supplier solutions to pay suppliers instantly, buyers can avoid having to take drastic action, build strong relationships with their supply chain and make money from their invoice data.
After a rocky 2018 for many companies, 2019 looks like it will be just as ‘exciting’. If you can get above the noise and address these three areas, your supply chain will hopefully be well prepared for whatever the year brings.
Paul Christensen is the co-founder and CEO of Previse, the company which uses smart tech to gets suppliers paid instantly. He is an experienced fintech entrepreneur and was previously Managing Director and Global Co-head of Goldman Sachs' Principal Strategic Investments team. He has been responsible for conceiving and executing a series of the industry's leading fintech ventures. Paul was recently appointed to Innovate Finance and City of London Corporation’s FinTech Strategy Group which aims to drive the success of the world-leading UK fintech sector.