Supplier collaboration is a vital component in getting the best value from a procurment operation and an efficient supply chain, but is a lack of digital modernisation potentially holding some organisations back?
Tony Harris, SVP & Chief Marketing and Solutions Officer at SAP Business Network explains to Procurement Magazine how outdated methods can be hindering efforts to have true visibility in supply chain operations.
Are some organisations still struggling with out-dated methods of supplier collaboration?
The supply chain challenges we’ve experienced in recent years have raised digitalisation to the top of many boardroom agendas. Yet numerous organisations continue to grapple with outdated collaboration methods and a lack of visibility into their supply chains. In fact, a recent IDC study sponsored by SAP found that that most organisations are still using “old-school” methods to collaborate with suppliers, with 68% of respondents saying they use e-mail to transmit and receive documents and data relevant to procurement and supply chain collaboration. Other methods include telephone (44%), supplier/customer portals (38%), and EDI (26%).
What this means for most businesses is that collaborating with suppliers remains one-directional and marked by inefficiency. Just think how many e-mails and follow-ups it takes to find and purchase from suppliers, not to mention the hours spent on the process. On a larger scale, this lack of digitalised external collaboration further handicaps organisations from swiftly responding to evolving business dynamics, leaving them vulnerable to the next disruption.
This cycle will persist unless organisations reinvent how they collaborate with suppliers. But where do they even start? In my view, the answer lies in embracing next-level business networks.
How do you define what a modern business network is?
Let's begin by defining “business networks" before diving into how they can enhance supplier collaboration.
Many people use the term “business network” to define traditional ways of communicating like phone, fax, email, or EDI. However, it’s important to clarify that these one-way communication channels are not true networks. To be more competitive, businesses need to connect their internal digital systems with their external partners through a real, many-to-many network.
That’s what business networks offer – a platform that lets businesses collaborate with other businesses across different domains, such as procurement, supply chain, logistics, finance, people, and asset management. Within these networks, organisations can seamlessly share data, streamline workflows, and harness network-wide intelligence to inform and improve decision-making processes.
What are the primary benefits of being part of a digitised business network?
The previously mentioned IDC study found that many organisations believe they are missing business opportunities because of poor collaboration. Among larger businesses, 53% reported missed opportunities, while 70% of midmarket businesses observed missed business opportunities.
One of the biggest benefits of being part of a business network is discoverability. It gives suppliers access to a digital platform that connects millions of buyers and suppliers. This is an invaluable way to communicate with more buyers across different geographies and industries, and an opportunity to venture into new markets and unlock new revenue streams. Another advantage is that suppliers can put their product catalogues on the network, making it easier for buyers to search for their products and place new orders.
How important is data in effective collaboration?
Business networks make it possible to share significant amounts of data, fostering enhanced buyer/supplier collaboration and elevating decision-making processes. For instance, suppliers gain access to critical data like production forecasts, orders, quality, and inventory information, enabling them to understand and improve forecasting and inventory planning.
Moreover, business networks leverage these vast data banks to facilitate more efficient logistics management by connecting suppliers with logistics partners, such as shippers, carriers, and other third-party logistics providers.
How can you improve the partner and customer experience?
Streamlining and automating key pain points of onboarding, order fulfilment, and logistics management processes holds immense potential for enhancing supplier collaboration. By leveraging business networks, organisations can eliminate friction points within the buyer-supplier relationship, cultivating a more robust and profitable partnership with customers and partners.
Leveraging the wealth of data shared across a business network, suppliers can also discern pivotal business trends, including top-selling products and comprehensive sales performance metrics. Additionally, the real-time sharing of vital information, such as order status, shipping details, and stock availability, empowers suppliers to proactively address customer inquiries, further enhancing collaborative efficiency.
Disruption is inevitable in today’s dynamic economic landscape. By leveraging business networks, buyers and suppliers can collaborate more effectively, promoting resilience and adaptability in the face of future market changes. This approach not only empowers suppliers to proactively respond to unexpected shifts in their environment but will enable greater supply chain effectiveness.
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