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It is Procurement’s Time In The Sun

By Oliver Stein. Director – South East Asia, JAGGAER

It would be far from the truth to say that top executives across Asia had not been interested in augmenting their supply chains before the pandemic hit. In fact, large organisations have on average invested about US$150 million in their supply chains from 2017 to 2019.   

While firms have been keen to innovate and bolster their supply chains, it is easy to get lost in the glitz and glamour of the front office. There is a host of new technology to choose from for a supply chain’s front-end operations. Think stock-taking drones, auto sorters and even RFID tags. These are all highly visible applications of cutting-edge technology in the supply chain industry.  

Optimising warehousing and fulfilment centre operations is hugely important and such efforts should certainly be continued. However, as an industry, we cannot continue to take the back office for granted, as many have done over the past decade. Even today some teams are still shackled by pen and paper or spreadsheet processes that are tedious and hard to track.  

Short-term pain but long-term gain 

The back office contributes in a very significant way to the successful operation of supply chains. The right tools and processes would have gone some way in cushioning the blow from the pandemic. Far too many organisations were exposed for having cumbersome and outmoded approaches to their supplier management systems.  

One glaring hole in the supplier ecosystem that was exposed by the pandemic in many organisations was a supplier portfolio that was simply too narrow. Relying on a single country supplier base or single shipment routes meant that many organisations paid the price when it came to COVID-19 induced disruptions. More and more, organisations are now understanding the importance of determining the supplies that are critical to business and ensuring they have a diversified supplier base they can rely upon. Businesses are also appreciating the importance of building relationships with suppliers to gain confidence in the suppliers’ resilience and ability to adapt over time.

Those with too broad a supplier portfolio also ran into many issues. Chief of which was that it was hard to get a complete picture of their supplier ecosystems. Without full insight into supplier ecosystems, costs can very quickly get out of hand – and this can happen largely unnoticed because there is simply too much data to consider. 

Businesses have needed to find ways to retain cash and have come to realise more than ever the value of close supplier relationships. Whichever way you look at it, most SMEs (small to medium enterprises) and large companies alike have found managing supply chains and their spend very difficult compared to how it was just a few months ago. The road back to the pre-pandemic situation, or the much vaunted but still vaguely defined “new normal” will be a tricky one to navigate.  

Short-term pain is often a prelude to long-term gain, and I expect this will be the case in the post-pandemic era. Many companies that were only considering digital transformation in procurement will now be ready to make it a reality. For some, this may involve coming up with creative solutions amid social distancing while others may look to rethink their sourcing and supply chain strategies with inshoring or nearshoring.

These short-term imperatives will encourage organisations to continue investigating their options for further investments that allow them to remain agile and competitive when conditions in their industry stabilise. 

The Technology Advantage  

The big difference between now and earlier crises is that there is a far greater focus on resilience, and this will make procurement and supply chain management more central to strategy. It has been aptly described as a switch from “just in time” to “just in case”. That does not mean abandoning efficiency as a goal, but it does mean a greater reliance on technologies that give you visibility and allow you to adapt.  

What has become very clear over the past few months is that companies that had digitally transformed their sourcing and procurement processes achieved better performance to manage suppliers through the crisis.   

Automating procurement processes allows firms to keep spend under close control. Traditionally, the source-to-pay cycle is done by requesting quotes, seeking invoices, receiving order documents and general relationship management with vendors. These processes take time and cost which could be easily replaced through automation. Firms could keep spend under control simply by automating the most mundane of paperwork, freeing up valuable employee time to engage in more meaningful work.

Embracing full data transparency is yet another key benefit of automating procurement processes. Having to keep up with multiple paper trails is simply not a viable or sensible option, especially not in this day and age where there is growing concern surrounding data security. Vital information could get lost in these trails which pose a great threat for any firm. Automated procurement platforms allow data to be seen and accessed through dashboards or trackers which make managing data more secure. A transparent set of data enables firms to not miss any gaps in the procurement process and instead allows firms to be more accountable to their stakeholders. Improvements can’t be made without data and data is not accessible without the right systems in place.

Last but not least, automation helps simplify supplier onboarding and improve supplier diversity. Supplier relationship management is able to take a step further with automation. Onboarding suppliers is a much smoother and simpler process when barriers are removed, and digital bridges are formed. 

Seize it now 

There is no time like the present for procurement technology. With global supply chains having captured the attention of boardrooms across Asia, it is clear that it is time for the back office and procurement to take centre stage. It is not too late to ensure your firm is able to initiate new digitalisation projects or accelerate existing ones to ensure that they get the supplies, materials and talent resources needed to adapt quickly and meet customer and stakeholder demand no matter what comes next.  

The time to invest is now.  

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