You do not need to look far to see evidence of the fragility of global supply chains. The COVID-19 pandemic, the war in Ukraine, port congestion, and the infamous blockage of the Suez Canal last year continue to impact manufacturers, importers, distributors, retailers, and consumers. With disruption now almost the norm, the need for more visibility and agility within supply chains has never been greater.
Supply chain weaknesses are evident when organizations lack visibility that results in being blindsided by one or more factors. Continued reliance on manual processes for both strategic and operational procurement is holding back many organizations. Both are critical, driving strategic end-to-end procurement and ensuring compliance, efficiency, and best-in-class operations.
Chief procurement officers understand the power of digitalization, which applies the latest computing technologies and best practices to business processes previously executed manually. They know it will transform their businesses by integrating key processes into a cloud-based, intelligent business network that connects them with thousands of suppliers, logistics providers, equipment repair vendors, and other business partners worldwide.
What they don’t know is how to get started. SAP has the technology and resources to help businesses choose a digital journey toward achieving their procurement goals.
Choosing a Digital Journey
The path to a successful digital outcome is different for every company, but the first step is to examine all current processes. Starting with source-to-pay, businesses should map out how they identify their sources of supply and then adding in existing processes. With this exercise, they will start to see where there is visibility and where there is not.
A great question to ask is: “Do the manual processes we currently run show me what is happening in my business?” If the answer is no, that is an area ripe for digitalization.
The first step might be toward seamless source-to-pay leveraging technology like SAP Ariba intelligent spend management solutions. These solutions tie together more than 30 processes — incorporating comprehensive transaction data — to deliver greater efficiency, accuracy, and control every step within source to pay.
As we deal with ever-evolving global trade restrictions and supply chain issues that are affecting business continuity, the ability to source quickly and efficiently is perhaps where businesses feel the most pain. If so, the guided sourcing capability for SAP Ariba Sourcing might be the right answer. These solutions have been taken to the next level with a new user experience that is more intuitive, drives faster adoption, and has embedded intelligence throughout the process for faster execution.
Or perhaps a company is looking to either improve the financial health of their supply chain or leverage its financial strength to deliver value back to the organization. In March, SAP closed on its acquisition of Taulia, which offers early payment through supply chain financing, dynamic discounting, and accounts receivable financing. With Taulia, both buyers and suppliers have better access to liquidity to improve cash flow. Our acquisition of Taulia further expands SAP Business Network capabilities and strengthens our solutions for the CFO office.
For procurement, supply assurance is paramount. Having the right supply — whether that is direct, indirect, labor, or services — to support the creation of goods is critical. To procure needed supplies, businesses must work smarter than the competition to minimize supply risk. That means going beyond a singular focus on buying for a price discount.
What more can be done? In an agile supply chain, businesses have multiple options to leverage procurement. One option is to pursue a location strategy. Can logistics costs be reduced by obtaining supply locally? Are there potential efficiency gains by developing and innovating within the supply base? Are there opportunities to collaborate with suppliers to reduce costs? If less waste is created, for example, can lower costs be negotiated? Looking at procurement beyond volume discounts separates a business from its competition in sourcing the same goods or services.
For companies that made the decision to digitize procurement prior to COVID-19, it afforded them immediate mobility of the procurement function. They could quickly find new suppliers, better manage existing suppliers, execute contracts, and pay suppliers in a timely manner. This kind of agility during uncertain times is a major advantage for any business.
Some organizations may believe that their procurement function is running on all cylinders, but they haven’t covered all their bases. As an example, many companies have demonstrated over the past two years that not having a multi-source strategy can prove costly. As organizations establish contingency plans to reduce risk, multi-sourcing will become more prevalent. Having the ability to efficiently locate sources of supply locally and globally in order to maintain supply assurance will be a distinguishing factor of agile versus reactive procurement organizations.
Digitalization Builds Supply Chain Resiliency
There are so many areas where visibility and agility can be improved, and that is why there is no one way to go about digitalization. It is about analyzing processes, understanding where they are most occluded, and determining where there is the most difficulty in the handoffs. Regardless of where a company is in their digital journey, SAP will meet them there, working to achieve optimal outcomes and help build the resiliency to better differentiate and succeed in the market.
Hear more about getting started with digitalization of procurement and supply chain processes at SAP Spend Connect Live.
Learn more about SAP’s intelligent spend solutions for procurement, external workforce, travel and expense, and business network by joining us for SAP Spend Connect Live, October 24-26 in Dallas, Texas. This will be a unique, in-person networking experience where you can gain actionable insight from inspirational speakers, industry experts, and customers as they share real-life digital transformation stories.
To learn more and register, visit the SAP Spend Connect Live website.
Etosha Thurman is chief marketing and solutions officer for Intelligent Spend and Business Network at SAP.