Supply Chain Management: Breadth and Depth

Recently, during last year’s international logistic congress, experts finally seemed to reach common ground: the digital world and its transformations are no longer just a puzzle. Expert David Kiger, in fact, had already stressed the importance of paying especial attention to the possible changes in the supply chain management field derived from the emergence and subsequent consolidation of the digital world. For quite some time now, almost every existing process —especially in the supply chain management field— has become digitalized, and according to experts such trend will likely be floating around for the next five to six years; however, in regard to supply chain management, the changes will also be seen in other areas such as procurement and delivery processes and the interactions between the parties involved.

Procurement experts already started to take note about what lies ahead. In fact, according to a recent survey, given the nature of what is about to come, a staggering 85% of procurement organizations and agents were currently undergoing or planning some sort of transformation. This is, of course, a shocking number, especially when compared to past results were just a third of businesses were adapting their supply chain management processes to a specific juncture. Based on these findings, it would not be a total nonsense to assert that today’s juncture has compelled companies to take action dramatically, especially within North America, Europe, and Asia. And it becomes more relevant when compared to the fact that the vast majority of both well-established businesses and startups regard procurement and supply chain management processes as the least adaptive to any kind of technological change: it seems that in their opinion, nothing but technology changes in procurement and SCM.

Nevertheless, technology, as mentioned earlier, has been evolving at an exponential rate, making businesses and ventures face significant challenges in regard to the efficiency of their procurement processes and operations. As a matter of fact, procurement leaders started to harness the current landscape and went on to leverage deeper knowledge of their suppliers in order to successfully convert such information into predictive data for decision-making purposes.

Such remarkable achievement is derived from the increasingly important value of information: by using information about purchases, news, trends, and customers, organizations are now able to accurately tailor their processes to today’s needs; however, it is important to note, that although the aforementioned landscape may seem a bit dark at first sight, it is definitely a crucial part of today’s business world, and need to be embraced should companies desire to thrive against their competitors.

Bear in mind that the circumstances are more complex than what meets the eye: today’s businesses spend approximately 66% of their revenue with third parties. Such number can be accounted for, to some extent, by the fact that businesses are now relying more on third services than ever before. Such engagement brings a higher degree of complexity and subsequently creates a greater reliance upon third parties capabilities.

Thus, outsourcing is increasingly becoming not only more relevant but popular. Years of outsourcing have increased the level of risk companies have to face: even a minor disruption in a distant marketplace may result negatively impact the global supply chain, since the risk and thusly the effect can be passed on through inter-dependent parties within the supply chain. And, as mentioned in the beginning, and as a consequence of such risk exposure, companies are beginning to conceive their procurement processes as a rather major opportunity: historically, buyers were only seen as price bargainers who were mostly measured by their ability to make processes cost efficient. Honestly, not much was expected of the purchasing process aside low-cost contracts; now, however, procurement is responsible for driving the sales process and delivering up to 60% of sales.

Moreover, in some avant-garde organizations, purchasing teams have been gradually taking over responsibilities commonly linked with innovation: big, gigantic, business monsters are leading by example through the hiring of dedicated and capable talent for procurement processes, who are responsible for constantly assessing the emerging market trends, acquiring innovation and contributing to a much better margin in the future. Thus, it is not rare to see companies and leading corporations sparing no efforts to develop and, ultimately, transform their procurement departments: the days of desk administrators are definitely gone. If a company truly wants to succeed in today’s business world, it needs to constantly seek continuous improvement to face today’s increasingly volatile landscape. The need for mobilizing resources rapidly and effectively is becoming almost compulsory to outrun competitors, remain profitable and innovative and maintain customers satisfied.

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Image courtesy of Unsplash at Pexels.com

2017 already started to depict the first procurement transformation irrespective of the industry. Across many business fields, companies will continue to compete by enhancing their supply chain management processes and talent. A sheer array of new ideas and unexpected developments in fields such as trade, IT and manufacturing will certainly gain more importance as time passes.

* Featured Image courtesy of Joey Kyber at Pexels.com

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