Our Journey Toward Supply Chain Transformation

Globalization and outsourcing has linked economies and markets together in a far more complex manner than we could have ever imagined. Over time, global markets and the supply chains operating within and across them have become so close to seamless that there is a beauty in the linear way the whole symphony unfolds in the marketplace.

China, as an example, has clearly benefited from globalization and has earned the title as “the factory of the world”, since so much of the world’s manufacturing capabilities have been located there. This occurred even though there have always been voices that highlight the risks to the supply chain if a significant disruption in that region would occur. Unfortunately, due to the spread of COVID-19 the world became very familiar, very quickly, with just how fragile our supply chains actually are.

From a supply chain perspective, many organizations went from relatively low risk, to being forced into ceasing operations almost overnight because their supply chain was so dependent on suppliers based out of China. Clearly this example is referencing back to the early days of the COVID-19 pandemic. However, within a very short time period, manufacturing operations globally were soon impacted across almost all companies and industries to some degree.

The pandemic has highlighted three crucial areas of need for our supply chain:

  • Procurement & Supply Chain Consulting
  • Procurement & Supply Chain Services
  • Source-to-Pay Platforms

Procurement & Supply Chain Consulting

Thankfully, the old concept of “one size fits all” supply chain consulting is largely dead. Best in class consultants are able to leverage their expertise to initiate a supply chain transformation that meets the specific needs of your organization and industry. It is advisable that your supply chain engagement takes a holistic approach because these tend to drive significantly more value than an ad-hoc or piecemeal approach completed sporadically over time.

From a cost perspective, a holistic approach may result in a larger upfront cost than ad-hoc or piecemeal approach but could be less expensive in the long run. Even more importantly, a holistic approach enables your supply chain to transform with a singular, unified vision, which is often linked to long-term profitability, growth and survival in tough times rather than a vision that can become disjointed or forgotten over time.

Procurement & Supply Chain Services

Supply chains are no longer simply about buying and replenishing goods. Instead, supply chains across industries are increasingly becoming interlinked and dependent on data to drive decision-making. In fact, many best-in-class manufacturing organizations have been turning towards seamless and connected strategic sourcing, contract management, vendor management and order and invoice management to ensure that the supply chain delivers the maximum efficiencies and cost savings possible.

However, not every manufacturing procurement and supply chain organization has the level of expertise needed to fully administer either part or all the source-to-pay process on their own. In these cases, it's best to look towards experts that can provide excellent value to the supply chain while also reducing operating costs.

Source-to-Pay Platforms

Modern Source-to-Pay platforms designed specifically for manufacturers truly serve as a ‘jack of all trades’ for the procurement and supply chain. They must be able to manage all spend types (Direct, Indirect, CapEx, and Services) and all suppliers. These solutions maximize value when they successfully, and collaboratively serve as the bridge between core systems such as ERP, MRP, PLM as well as internal stakeholders and the supply chain.

Platforms play a central and critical role in supply chain transformation because they enable standardization, automation and access to data to ensure all processes and decisions are informed. This is why a single unified platform approach across the complete source-to-pay process is the way forward. At its foundation, it enables clean data and seamless, collaborative processes and transparency across all processes, categories, suppliers, as well as access to business analytics and much more.

From a manufacturing perspective, we really need to focus on what can be done moving forward to build resilience in supply chains. Manufacturers should be able to rely on their Source-to-Pay platform and processes to:

  • Address all spend & all suppliers
  • View and manage risk and performance data across
  • Collaboratively build, manage and implement supplier development and category management programs
  • Enable the requirements and nuances of Direct Material Spend with Cost Breakdowns, Sourcing Optimization, Integrations to core systems, risk & performance management, new product launch processes and part quality management (APQP, PPAP, etc.), Collaborative Forecast and Planned Order management

Moreover, the Source-to-pay platform should not be rigid, so it can flex to support various regions, business units, changing regulations, acquisitions, growth and innovative ideas in procurement and supply chain processes all while offering a superior user experience. This type of platform maximizes the value generated across source-to-pay and enables organizations to go beyond best-in-class performance to truly build competitive advantages across procurement and the supply chain.

Conclusion

The impacts of the COVID-19 pandemic on our supply chains have highlighted the challenges manufacturers face and have helped to accelerate the need for further digital transformation. As organizations work to recover from the impact of COVID-19, we must look for ways to digitize processes and leverage flexible platforms that analyze data holistically and provide insights into supply chain efficiencies and safeguards. In this way, we can begin to transform supply chains into a more resilient one, so our organizations are better prepared for success despite unforeseen challenges and crises.

About the Author

Doug Keeley, Sr. Product Marketing Manager at Ivalua, Manikandan Mangalathumadam