THE SUPPLY CHAIN
By Emily Rakowski, Global Vice President, Audience Marketing and Demand Generation, SAP Ariba
The world today is a different place. There are officially more mobile devices than people. And with increasing frequency, we use these devices to manage our lives. To shop. To pay for things. To find restaurants and hail cabs. To network with our friends and family. Many of these same technologies have made their way into the enterprise. And they are transforming the way we work. Business networks, for instance, are changing the way we discover, connect and collaborate with our trading partners. They are giving us access to insights and intelligence that allow us to make better, more informed decisions. They are, in essence, transforming procurement as we know it.
So what does the future hold? Here are five trends to watch:
Supply chains will go digital
Technology has driven a new wave of productivity by digitising key financial and business processes and enabling collaboration across the organisation. This trend is expected to continue. Paper-based purchase orders and invoices will become a thing of the past, replaced by end-toend automated transactions. But more importantly, best-in-class organisations will fuel the next wave, leveraging business networks to extend these processes and systems beyond the four walls of the enterprise and create a shared community of partners executing improved, fully automated, and coordinated processes in a more informed way than in the past.
Fuel innovation and increase in collaboration
Many companies have taken steps to improve the efficiency and effectiveness of their supply chain operations by automating key processes such as procurement, orders, invoicing and payment. And with good reason. Research shows that companies who have embraced digital strategies are seeing real value, boosting revenues more than nine per cent, market valuation more than 12 per cent and profitability by over 26 per cent.
Led by procurement, many of these companies will take things to the next level and enable new processes that drive more collaborative, intelligent and transparent ways of operating. Processes, like dynamic discounting, that allow them to secure discounts that can be reinvested in research and development and funding to expand their business. Contingent workforce management through which they can identify and manage highly-specialised resources needed to develop that next-generation product. Or network-based spot buying through which they can improve the purchasing process for low value, non-sourced items and eliminate maverick buying.
Business will run simpler
Personal networks from Facebook to Twitter have made it simple for consumers to shop, share and consume in new and more informed ways. Business networks provide an equally easy and scalable way for companies to discover, connect and collaborate with the trading partners and resources they need to operate in today’s dynamic world. Procurement will tap into these networks to create a simple, consumer-like experience where with just a few clicks, they can shop for goods and services, place and manage orders and pay for them electronically, view and manage spend across all major categories through a single, connected platform.
Lines will blur
Fueled by digital technologies, procurement will take the lead in integrating business processes and collaborating across functions in entirely new ways that drive value. CPOs will, for instance, engage in helping to manage the financial supply chain, turning payables into a profit centre because they have real-time visibility into whether an invoice is okay to pay and whether it has it been matched against purchase orders and contracts. Or extending days payable outstanding to improve the overall balance sheet while at the same time offering early payment discounts to suppliers because to mitigate both financial and supply risk.
Procurement will get smarter
Like their social counterparts, business networks house incredible amounts of insights and data. Procurement will unleash the power of this information to optimise their supply chain decisions and accelerate innovation and growth. They may, for instance, access performance ratings on potential trading partners along with recommendations from the community to determine who to do business with or detect risk in the supply chain. Or combine in-the-moment purchasing data with historic trends to predict stock outs before they happen and direct replenishment. Or gain real-time insights into invoice approval status to more efficiently manage cash.
In today’s global and connected economy, digital supply chains are the onramp to innovation and success. And if you want to be among the winners, you need to get on the highway and go fast. Start today by reimagining your supply chain. Develop digital strategies that allow you to proactively evolve ahead of the competition. Employ comprehensive solutions that support the entire sourceto- settle process and create value for all parties involved in it.
Do not just think about the future, see it and shape it to your advantage. In doing so, you will deliver your organisation to new worlds of excellence.