Time to move direct materials supply chain to front-of-the-line on digitalization

The inability to address the breakdown in supply chains while accommodating a remote workforce simultaneously, compelled organizations to re-prioritize goals. In the context of commodities and direct materials, the processes for sourcing, trading, and supply chain execution were locked in a mix of manual steps, disconnected systems, and inaccessible spreadsheets. Sourcing teams were unable to assess the supply chain risks and company-wide impact they were facing. With workers being remote, collaboration channels were limited across internal teams and extended out to core suppliers and partners.

Business leaders now understand that the ability to connect the dots between systems, data and their people is the key to maintain business continuity, remain competitive and ensure sustained growth.

What constitutes a resilient supply chain?
Achieving a resilient supply chain requires tapping into transformational digital capabilities that include automation, engaging the ecosystem and supporting new ways of working as core areas:

Process Automation: In fast moving markets, businesses demand speed and agility, but the ground reality is that teams must manage with limited time and resources. This is where enterprises stand to gain from acceleration of automation efforts.

As goods go through the supply chain, there are a myriad of steps throughout the process.

Each step contains multiple activities and countless handoffs across transportation, warehousing, inventory tracking, trading and managing risk, and international shipping. Businesses will benefit from implementing standardized processes conducive to automation across each of this step that lets them respond to disruption faster, thereby greatly enhancing efficiency and resiliency. Teams can use the time saved from chasing down updates by investing it in more strategic areas.

Engaging the ecosystem: Over 73% of organizations in a recent McKinsey survey encountered problems in their supplier base, and 75% faced problems with production and distribution due to Covid-19. Participation across the supply chain ecosystem will be crucial in the next two years. One of the top issues to getting there is insufficient digital technologies in the supply chain.

That said, it isn’t about more, but the right kind that is developed for commodity and raw material intensive businesses. Critical focus areas include supplier and buyer collaboration; supply chain execution; and sustainability transparency.

Supplier Collaboration: Relationship matters. The importance of making the shift from a transactional relationship to one that is more collaborative cannot be understated. A conscious effort in espousing behaviours and practices early in the source process not only helps establish trust in the supplier network but also enhances competitive edge in the longer run.

What plays a key role in building this relationship is establishing trust and complete transparency by enabling suppliers to collaborate efficiently. Business demands speed and agility, but the ground reality is that teams must manage with limited time and resources. Automating communication can help drive value in fast moving markets. By digitizing supplier collaboration, buying organizations can reduce the cost and latency of information sharing, while ensuring everyone operates on the same version of truth. Teams can use the time saved from chasing down updates by investing it in more strategic areas.

Supporting new ways of working: Today two out of three employees report having to exert too much effort to use the technology provided by employers. Meanwhile, the average employee spends more than five hours a week wrestling with tech issues. Gone are the days when an employee could walk up to the IT desk to trouble shoot.

Remote working is here to stay. New ways of working are shaping up that will call for significant focus on the need to enable collaboration and self-service to support remote working at scale, not just for employees but also for buyers and suppliers. For instance, simplified user interfaces will go a long way in enabling works to do their job easily and seamlessly.

The need to pursue an aggressive digitization agenda could not be clearer. Prone to human errors, manual tools like spreadsheets or legacy ERPs cannot provide the speed, visibility or functionality to derive insights to make timely decisions. It is time to push direct materials supply chain to the front-of-the-line and press for digital change.

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This article was first published on The Times Of India