Joe Catling, Business Development Manager, Proactis
There is a lot of attention on Supply Chain Resilience at the moment, and rightly so. But it’s now time to focus on how to achieve such resilience.
Firstly, and it goes without saying, managing your supply chain, and the risks involved, is absolutely critical to your organisation’s financial health and competitive performance. As we are seeing, the negative impact of global events on an organisation’s financial position or reputation is potentially huge, even devastating.
But effective management of your supply chain is the only route to resilience, as it:
Ways to improve Supply Chain Management
Automate where it counts
- improves the financial position of your organisation by delivering value across the chain;
- plays a significant role in customer satisfaction through the delivery of products and services;
- reduces operating costs from Procurement activities, through operations and logistics functions and throughout the whole supply chain.
It’s quite common for Accounts Payable teams to deal with surprise invoices that lead to time-consuming investigations and delays in invoice processing and payments. These delays can strain relationships with suppliers and impact the supply chain. Solutions with Accounts Payable (AP) automation
that accelerate turnaround times, as well as reduce potential for manual errors and delinquent payments, all help to increase retention and strengthen relationships with existing suppliers.
As automation takes manual tasks out of the picture, the complexities of many processes are eliminated. For example, process efficiency increases as paper invoices are replaced with digital invoices that can be approved within minutes, automatically.
Pay on time
Following on from this, automation also ensures that invoices are processed faster and payments are made on time. Timely payments help build trust and improve relationships with suppliers. With a reputation for paying on time, or even having a mechanism to pay invoices early, and making it easy for suppliers to manage their accounts receivables with you, suppliers may be more willing to give your organisational preferential prices and terms.
Data-driven decisions: With automation, the AP team can access, and work with, a large volume of data. It can use this data to identify process gaps and improve back-office functions. In addition, data analysis tools provide the AP team an opportunity to support more strategic initiatives.
Collaborate, and reduce costs
Work together with suppliers on how to reduce costs and understand cost structures. Look at options with suppliers, such as different ways of payment. Don't just keep doing the same thing, just because that's the way you've always done it. You may even find yourself in a position to take advantage of any early payment discount terms your suppliers may offer, or accelerate payments to your suppliers.
Ensuring that you have the ability to track each and every product that your organisation needs – from initial order to invoicing – is vital. And data is key to this. If properly collected and well-managed, data from financial and procurement teams can provide a near real-time view of spend. In periods of disruption, having such visibility is crucial to making informed decisions to manage the situation.
Additionally, giving your suppliers the ability to keep up to date so that they can better understand your current situation — and even plan ahead to fulfil future demand. Internally, key members of your team should be able to access details they need about the process.
Giving suppliers and colleagues the power of visibility will improve supplier relationships and ensure that all parties are up-to-date.
Be prepared for disruption
You would struggle to identify any industry whose logistics haven’t been disrupted at some point, whether by the pandemic or by Brexit, and you need only recall pictures of a blocked Suez Canal to see a prime example. The businesses that can flex when they experience issues within the supply network, and have business continuity procedures in place, will be more adept at managing the impacts.
If Procurement teams plan for disruption, even by simply diversifying the supply chain, or reducing the reliance on one supplier, any knock-on effects to the business can be more successfully minimised. If a varied supplier group is vetted and put in place before a disruption, then suppliers can be scaled up as needed, when another encounters difficulty.
For Finance teams, this avoids unanticipated increased costs of supplies too. For example, as we have seen, if a timber supplier is experiencing a shortage, businesses can avoid paying potentially increased costs for the timber by shifting demand to another.
These are just a few ways that Finance and Procurement teams can manage their supply chains and, in doing so, achieve the goal of supply chain resilience. To find out more about other methods that are available, or to discuss your supply chain challenges:
Contact us today