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How Supplier Network Automation Drives Strategic Decision-making

Supplier Network Automation
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Supplier network automation takes the guesswork out of procurement, giving you the power to make smart, data-driven decisions that boost your business. It’s like having a superpower in your pocket – you can streamline processes, slash costs, and build stronger bonds with your suppliers, all while navigating the market with real-time insights. This isn’t just about fancy tech; it’s about building a resilient, future-proof supply chain that keeps you ahead of the pack. So, are you ready to ditch the spreadsheets and embrace the future of procurement? Let’s dive in!

Important Pointers

  • Boosting efficiency and competitiveness: Automating your supplier network streamlines processes, cuts costs, and gives your business an edge.
  • Data-driven decisions: Gain real-time insights to guide strategic choices with a well-managed automated supplier network.
  • Strengthening supplier bonds: Improved communication and collaboration fostered by automation can lead to stronger relationships with your suppliers.

The Global Need for Supplier Networks

Let us start by discussing a real incident which took place in 1985. US automaker Chrysler was competing with Japanese automaker Toyota in terms of quality, cost, and customer satisfaction. Sales of Toyotas were much higher than Chryslers, but Chrysler consultants were unable to figure out why there was such a difference between similar models of cars. They found out that while Chrysler was dealing with 21 different suppliers, Toyota was dealing with just 2. This forced Chrysler to take a look at their suppliers and revamp their sourcing strategy. It has become really important for industries that rely heavily on suppliers to explore better opportunities and make sure that they strategize their requisitions in a way that they get the best quality products or services at a minimum cost.

In today’s competitive market, where the focus is more on the bottom line instead of the top line, it has become imperative to explore all the options available rather than relying on a handful of suppliers. Supplier Networks have thus become essential to compete in today’s business environment. Also, at a time when the global economy is suffering from the consequences of unpredictable downturns, it is imperative for both suppliers and buyers to assess the risks and take the necessary steps to mitigate those consequences, thus ensuring the business is least affected by the economic turmoil. Supplier Networks have increased the geographical reach of buyers, which helps buyers procure better quality products at economical prices. While dealing with a larger number of suppliers across geographies, it also becomes difficult to track and assess the capabilities of the suppliers, leading to increased risk.

Read here : Your Guide to Supplier Network

Moving Towards Dynamic Automated Network

A Supplier Network is a virtual platform that enables suppliers and buyers at various locations to collaborate and do business. It’s a common platform where both suppliers and buyers can discover suitable opportunities and initiate business transactions. Automated Supplier Network eliminates the time lag experienced in linear supply chain by providing real-time data to make informed decisions, helps speed up the procurement cycle, resulting in timely selection of goods, delivery, and payment, leading to increased supply chain efficiency. Moreover, it helps reduce paperwork and thus eliminates manual errors and delays caused by the physical movement of these documents. Procurement, over time, has evolved from being seen as a cost center to a more strategic activity that helps organizations gain a competitive advantage. In developed economies, where competition is high and the scope of increasing market share is limited, reducing costs seems like the only way to increase profits.

Companies that automate their supplier networks can achieve cost savings of up to 20% through streamlined processes and reduced manual effort. (Source: McKinsey & Company)

Automated Supplier Networks Strategy:

In order to create an Automated Supplier Networks, multiple organizations are undergoing a transformation in their approach. The emphasis is now shifting away from away from optimizing and managing discrete functions, such as buying and manufacturing. Instead, these organizations are harnessing the potential of supplier network automation to adopt a more comprehensive perspective—one that enhances the entire spectrum of procurement and supply chain activities to align with overarching business objectives.

Consider one of our customers, a leading pharmaceutical company which operates in more than 20 countries globally. They wanted to increase the suppliers in their database, improve supply chain visibility and gain visibility on the information for vendor compliance. But since it was a manual process, it was becoming difficult for them to maintain all the data at a single location. With Zycus’ Supplier Network, we helped them automate the process and capture all the information about the suppliers centrally. The customer got accessibility for automatically logging the suppliers at the time of onboarding itself and categorized suppliers at the same time. They had 10,000+ suppliers as part of the network and onboarded 9900+ new suppliers as well. The customer also made it a mandate for their suppliers to use Zycus Supplier Portal. This helped in increasing the adoption within buyer and supplier groups.

Check out this great Video by Donald Klock, Professor of Supply Chain Management at Rutgers Business School and ex-CPO at Colgate Palmolive at  Office Hours – Building Blocks for a Robust Supply Chain Balancing Supplier Performance and Risk

Figure 1 describes the main pillars of an Automated Supplier Network: perpetual agility, comprehensive transparency, smart optimization, interconnected community and intelligent decision-making. Each of these attributes play a role in enabling more sound and informed decisions and can help organizations address the integral question in their strategic think tank: how to ‘always’ be a winner

main pillars of an Automated Supplier Network
Fig.1: Pillars of an Automated Supplier Network

Incorporating Supplier Network an Integral Part of Business Strategy:

In the present competitive market landscape, the competition is not merely limited to capturing new markets and increasing market share. Competition in developed economies is focused on cost reduction and making the supply chain more efficient so as to reduce damage, losses and the cost of inventory. Automated Supplier Networks strategy can bridge the gap between suppliers and buyers by bringing them closer, thus enabling a seamless flow of information between the two. This, in turn, helps organizations improve quality while reducing production costs.

Figure 2 illustrates the Procurement indicators and demonstrates how the emergence of Automated Supplier Network strategy enables organizations to attain newer levels of performance, enhance operational efficiency, and bolster effectiveness.

Benefits of Supplier Network Automation
Fig 2- Procurement Indicators

The capabilities of Networks can influence supplier network automation strategy by allowing organizations to accomplish various objectives, thereby reducing or eliminating trade-offs while still preserving competitiveness.

Benefits of Supplier Network Automation

1. Automated Processes Reducing Manual Efforts

One of the major advantages of a Supplier Network is that data entry, data processing, and data transfer between suppliers and buyers is automated. This means there is limited manual effort, resulting in a reduction of processing time, and increased efficiency in the flow of information between the parties. This helps both parties collaborate closely and meet each other’s expectations.

65% of supply chain leaders believe that digital technologies like automation are critical for building a future-proof supply chain. (Source: Gartner)

2. Catalog Management

One of the most tedious tasks for any supplier is managing catalogs. With a Supplier Network coming into the picture, this task becomes much simpler. Different catalogs can be uploaded for different sets of customers with future pricing. It becomes easier for both suppliers and buyers to manage catalogs and avoid any confusion related to item specifications, prices and special offers

3. Simplified Sourcing Process

With the help of Supplier Network integrating with the sourcing solution, the entire sourcing process can be simplified by responding to sourcing events with an interactive forum for query resolution and viewing the event scores through the supplier network.

4. E-invoicing and Reduction in Paper Flows

An important advantage of a Supplier Network is electronic invoicing. As soon as the ordered items are delivered, the procurement team cross-checks the items and processes the invoice. Once this is done, the invoice is transferred to the finance team instantly and payments are made thereafter. Thus, errors and delays pertaining to paper flows are reduced drastically. With new OCR capabilities, even hard copies of invoices and POs can be uploaded into the system directly and be processed electronically thereafter.

Watch this Video on E-Invoicing- Crash Course – Accounts Payable Makeover: Elevate Your E-Invoicing Game – Zycus Cognitive Procurement

5. Contract Management

Supplier Networks also enable both suppliers and buyers to keep a close watch on their contract terms. This reduces contract violations which result from miscommunication or from missing important clauses of the contracts. Both parties, at all times, are aware of their commitments and expectations, leading to smooth business transactions.

6. Reduction in Purchasing Cycle Times

Supplier Networks ensure that there is a smooth flow of information between all the parties involved which results in timely processing of orders, delivery, processing of invoices and payments. Thus, the system helps the concerned parties gain more confidence working with each other and enables them to reduce purchasing cycle times significantly.

7. Up-to-date Supplier Information

An efficient Supplier Network integrates with your supplier management software solution and enables the onboarding of potential suppliers with robust pre-qualification. It also facilitates a flexible approval engine for hassle-free supplier onboarding, thus reducing the cycle time and improving the supply visibility with automation. Information about the suppliers on the network is always updated through integration on an ongoing basis which will give the users the latest information about the suppliers for all their transactions.

8. Enhanced Supplier Performance Management

Supplier Networks help in tracking the performance of the suppliers by enabling the supplier to monitor his performance reports as well as the development reports through performance report card and development program card. This will give him an idea about his strengths and weaknesses thus helping him to improve on his pain areas.

74% of executives believe that automation is essential for maintaining a competitive edge. (Source: PwC)

Conclusion

Automated supplier networks signify the evolution of supply chains, shaped by the evolving technological landscape and the growing interconnection between the digital and physical worlds. This transformation is a consequence of newfound access to information, computational capabilities, and groundbreaking technologies, which have dismantled the linear and isolated nature of traditional supply chains. The result is a network where real-time data and insights can be seamlessly exchanged throughout the entire supply ecosystem, facilitating informed decision-making.

Transitioning towards an “always-on” Supplier Network isn’t solely about implementing a single technology; it encompasses cultivating an adaptable supply culture and fostering a more strategic approach to meeting customer needs. Investments in supplier network technology and strategies can emerge as crucial differentiators, not only in support but also in propelling overall business strategies forward.

Are you ready to unlock the potential of an “always-on” Supplier Network for your business? Experience the future of supply chains with us today. Request a demo now and discover how our solutions can empower your supply ecosystem and drive informed decision-making.

Related reads:

  1. Embracing Automation for Enhanced Connectivity, Supply Network Relationship and Role of Automation
  2. The Ins and Outs of Supplier Networks
  3. Things You should Know about smart connected supplier network
  4. White Paper – 5 Steps for effective supply chain management
  5. White Paper – A Winning Strategy to Supplier Enablement: The Pyramid Approach
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