Beating the Supply Chain Challenge

In the 1960s, psychologist Walter Mischel performed a study around delayed gratification.  He left preschool-age children in a room with one treat, offering them the choice of eating it immediately, or waiting for him to return with two treats.  Without guidance, most children devoured the treat immediately, but after being advised to think of the treats as something inedible, their self-control improved.  Mischel concluded that not only can willpower be learned, but that it serves as "a protective buffer against the development of all kinds of vulnerabilities."

Another way of looking at the outcome of this study, is that people can choose to be flexible in how they frame the situation around them, and that their success depends on that choice.

Following the global COVID pandemic and the war in Ukraine, global supply chains have become increasingly challenging, impacting the competitiveness of manufacturers.  Could we more successfully manage these challenges by thinking about the situation in a different way?

The Connected Supply Chain

The supply chain is an ecosystem of companies, which rely on the synchronized movement of thousands of interrelated parts, ultimately aimed at the delivery of a product. 

The "Connected supply chain" uses digital technologies to connect everyone involved in a supply chain, drawing together disparate systems and partner networks to ensure that information flows properly and to deliver end-to-end visibility and improved business operations.

The supply chain is a major strategic driver and area of competitive differentiation, but our ability to harness its value depends on how flexible we are in framing its challenges so that we can improve performance and reap the benefits.

It's All About Communication

Communication is so much more than just the exchange of information.  Danielle Saputo describes communication as being essential for both our personal and professional lives but warns that it could be misinterpreted, if the words we use are overshadowed by how we deliver them.  In our personal lives, a breakdown of communication could lead to feelings of frustration or anger.  In the context of supply chains, it could lead to inefficiencies and disruption.

If we view our supply chain as an opportunity for growth and recognize digitalization as the means to affect that growth, we become exposed to new and creative opportunities that could impact our organization as a whole and improve our long-term competitive stance.

A global manufacturer of equipment for the semiconductor industry, which used to suffer from supplier payment inefficiencies that often resulted in delivery delays, addressed the problem by automating invoice processing from submission through payment, along with a series of automated validations to ensure accuracy, and complete visibility into the process by both buyer and suppliers.  The issue of supply delays was solved.

More Than Just Automation

Addressing supply chain delays was one of the main achievements this manufacturer attained through automation.  But this was not their only challenge.

Before implementing their automation solution, they manually processed invoices, performed currency conversions, validated data, and entered data into the ERP system – time consuming and error-prone processes.  Printed documents piled up on desks and more and more office space was used for archiving.  

The automation solution they implemented did not require them to replace their ERP system, which meant they could continue working in a familiar environment.  More than 90% of their invoices now enter the ERP system automatically, ready to be paid, but not before going through sophisticated validations and confirmation that relevant Goods Receipts have been issued for all line items.  All currency conversions are performed automatically, and manual data-entry is a thing of the past.

Think Differently

Manufacturers face an abundance of supply chain challenges that impact their cost structure and competitive stance.  Thinking about the situation differently could reveal new ways to address these challenges and progress towards a fully connected supply chain.

An important element of the connected supply chain has to do with the interactivity between buyers and suppliers, from the point of sourcing a product through payment.  Automation that speeds up processes and makes them more accurate, provides guidance and enables transparency, and reduces overall cost and process cycle time, would greatly contribute to improved buyer-supplier relations and consequently to a more reliable supply chain.