Enabling Self-Service in E-sourcing

At Eka, we have been writing extensively about two major esourcing initiatives that we are hearing across the industry pundits and as well as directly from our clients and prospects:
1) Driving business continuity and resiliency
2) Addressing the increased risk exposure that processors and manufacturers experienced during 2020

In a recent survey from Deloitte, these efforts are having a profound impact on Chief Procurement Officers (CPOs) in redefining their priorities.

In the survey, they draw out important findings on how top-performing organizations are investing versus those that are underperforming.  One key gap that they call out is: “only 50% of procurement leaders surveyed had high or very high visibility into their tier 1 suppliers, while 90% of organizations rated their visibility into their extended supply networks as moderate to very low.”  This lack of visibility makes it increasingly difficult to recognize supply chain risks and breakdowns, and even more importantly, the inflexibility and legacy nature of underlying systems, limits an organizations ability to rapidly bring on new suppliers, especially for critical direct materials.

Highlighted in the survey is that digitization is one the critical pieces that separated top-performing organizations and the laggards.  Not only are organizations able to recognize challenges in their supplier base (and supporting networks) but they are able to respond more quickly to these vulnerabilities with digital solutions around esourcing.

A challenge that we are asked about, is what do you do when your supplier base is not as digitally proficient?  This becomes even more pronounced when you include Tier 2 and Tier 3 suppliers in commodity-intensive industries in including Food and Beverage, Metals and Mining, and Agriculture.  At the end of the day, you are only as digitally advanced as your weakest link.

Challenges of an ecosystem that lacks digital proficiency

What do we mean by lack of digital proficiency?  Unlike in many other industries or spend categories that have standard messaging formats (think EDI), much of the communication in commodities between the buyer, supplier and processor still occurs in unstructured formats.  It could be via email messages, telephone calls or company specific formats.  As an example, one of Eka’s clients was processing over 200,000 emails each year to secure contracts with their suppliers.  Not only was this extremely inefficient, but it restricted their ability to strategically manage their supply base.

Enabling Self-Service in E-sourcing

As a result, we are seeing processors and manufactures increasingly offer digital self-service capabilities to their suppliers as a part of a broader esourcing and supply chain initiative.  The services offered include everything from contract/RFQ management all the way through to invoicing and payment.  Additional esourcing features that are specific to the commodities space include: quality management, inventory management, logistics management/scheduling all the way through to new vendor onboarding.  It is viewed as way to increase transparency for Tier 1 suppliers, but also being more inclusive for Tier 2 and Tier 3 targets.

This ability to offer in-context collaboration and support through esourcing, not only allows for improved efficiencies (in our previous example, buyers freed up over 20% of their time, to focus on more strategic activities including evaluating new suppliers) but improves supplier relationships through greater business transparency and faster problem resolution.  Emerald Grains found that by externalizing their grain stock management system through a self-service portal, they were improving their relationships with their farmers by paying 98% within 24 hours.

This ability to offer self-service support to better connect across your ecosystem, addresses two of the critical principles within this new normal.  The Hackett Group found that top performing Financial Organizations 12x more likely to provide their suppliers with self-service tools.  Eka, through our esourcing and supply chain solutions have embodied these critical themes and are at the forefront at helping organization digitally transform their supply chains.