Executive Briefings

In an Uncertain Economic Environment, You Must Create Agility Through Supply Chain Automation

To truly thrive during economic upswings and downturns requires superior foresight, planning and discipline. Years ago, consultants coined the term corporate agility. While it seemed like jargon at the time, its true meaning is just now being understood. In times of uncertainty, organizations must be prepared for sudden changes in direction that cannot be anticipated. The ability to jump either way is almost a requirement in today's business climate. Agility gives organizations the unique ability to react faster and move more nimbly in an environment that changes almost hourly. So how does one go from an interesting concept to real action? Where does an organization start if it wants to create agility?One key contributor to corporate agility is in the management of the supply chain. To become an agile company that can ramp up or scale back at a moment's notice, an agile supply chain is a necessity. For most organizations, having an agile supply chain translates to four basic requirements:

1.  Clear visibility into spending
2.  True contract leverage and negotiation
3.  Robust inventory and asset tracking
4.  Proactive maintenance and repair

Execution of each requirement calls for a careful balance of people, process and technology.

Agile People

Creating agility in supply chains is all about working with people to affect change. Although culture change is never easy, towing the line of "this is the way we've always done it" simply won't work anymore. The world is changing before our eyes and old rules simply do not apply anymore. The most successful organizations and employees will be those that champion new solutions to old problems.

To engage and empower agility in a workforce, employees must have involvement and buy-in to new business processes and technology right from the beginning. They must understand what agility means, how it helps make their jobs easier, how it will make their companies more successful.

Overcoming well-established mindsets isn't an easy task, but when people understand how agility affects them, their company and the industry, they are much more open and supportive of change that supports agility.

Agile Business Processes

Business processes are the most fertile area for agility. Many organizations operate in a world where everybody can buy anything and nobody can get what they need. Goods are routinely expedited at extra cost to accommodate breakdowns. Invoices must be walked around to get payment so that vendors will not hold up critical goods and services. All of this drives up the cost of projects and makes operations more difficult to manage.

Agile business processes allow for effective communication between field offices, purchasing, AP, management and vendors. Control is maintained over the availability and the cost of goods and services. Treasury is forewarned of the need to pay for services and products. Project and operations costs can easily be accessed so that action can be taken proactively to improve results. These efficiencies are created by careful design and implementation of supply chain business processes that fit a company's individual profile.

Agile Technology

Technology is the bridge that connects people and business processes to execute supply chain agility. Unfortunately, many organizations are using outdated technology that limits their ability to operate effectively in today's business world.

Agile business processes require automation solutions to operate. Modern technology solutions, including purchasing and invoice automation, help achieve supply chain agility in many ways. It starts with giving you a clear view of spending and the true cost of operations. It deals with the complexity of goods and services and the need to look across several vendor catalogs. It extends to the ability to see financial commitments made as a part of project status. Finally, automation technology provides information that allows the evaluation of materials, vendors and projects so that project and operational performance continues to improve.

In short, automation technology helps shorten organizations' reaction time. Whether a company is scaling back or ramping up, automation facilitates a smooth, streamlined process rather than lurches and jumps. 

It takes organizational discipline to implement supply chain agility. The trouble is most of our experience is based on trying to achieve discipline around broken processes and inadequate technology. Companies can use advanced automation technology to gain more control and visibility over their spending. 

Real-World Applications

So how does all this work out in the real world? A few leading-edge companies have bought into supply chain agility and are already reaping the benefits of automation initiatives. 

Freeing up capital is one of the best ways for companies to become more agile. Seeing the potential savings to be gained from consolidating spending to fewer suppliers, one company implemented an automation system that enabled the purchasing team to consolidate vendors and drive lower prices through higher volumes. 

The system also reigns in "maverick spenders" by providing an online portal where employees can only order from contracted vendors. The company anticipated 4 percent in savings from reduced cost of goods and services through supplier rationalization and greater contract compliance.  With more than $160m in annual operation spend and a $1bn capital budget, those savings equate to at least $6.4m annually. That capital cushion gives the company the ability to better weather uncertainty.

Other firms are creating an agile supply chain through greater inventory visibility. One industrial company used an automated software solution to help them ship a product from Houston to Calcutta. Along the way, the shipment needed to be inspected and inventoried a total of three times in three different locations. 

Each stop also meant currency conversions, expense allocation and detailed tracking. To help monitor each leg of the journey, the automation system created "virtual warehouses" to serve as electronic mile markers. This visibility allowed them to proceed with confidence, something that rarely happens a half a world away. 

Of course, agility won't come overnight, many organizations find that agility is more of a journey than a destination. But with the right people, processes and technology in place, many organizations will be able to position themselves for the future by becoming more agile. 

Source: Verian Technologies

To truly thrive during economic upswings and downturns requires superior foresight, planning and discipline. Years ago, consultants coined the term corporate agility. While it seemed like jargon at the time, its true meaning is just now being understood. In times of uncertainty, organizations must be prepared for sudden changes in direction that cannot be anticipated. The ability to jump either way is almost a requirement in today's business climate. Agility gives organizations the unique ability to react faster and move more nimbly in an environment that changes almost hourly. So how does one go from an interesting concept to real action? Where does an organization start if it wants to create agility?One key contributor to corporate agility is in the management of the supply chain. To become an agile company that can ramp up or scale back at a moment's notice, an agile supply chain is a necessity. For most organizations, having an agile supply chain translates to four basic requirements:

1.  Clear visibility into spending
2.  True contract leverage and negotiation
3.  Robust inventory and asset tracking
4.  Proactive maintenance and repair

Execution of each requirement calls for a careful balance of people, process and technology.

Agile People

Creating agility in supply chains is all about working with people to affect change. Although culture change is never easy, towing the line of "this is the way we've always done it" simply won't work anymore. The world is changing before our eyes and old rules simply do not apply anymore. The most successful organizations and employees will be those that champion new solutions to old problems.

To engage and empower agility in a workforce, employees must have involvement and buy-in to new business processes and technology right from the beginning. They must understand what agility means, how it helps make their jobs easier, how it will make their companies more successful.

Overcoming well-established mindsets isn't an easy task, but when people understand how agility affects them, their company and the industry, they are much more open and supportive of change that supports agility.

Agile Business Processes

Business processes are the most fertile area for agility. Many organizations operate in a world where everybody can buy anything and nobody can get what they need. Goods are routinely expedited at extra cost to accommodate breakdowns. Invoices must be walked around to get payment so that vendors will not hold up critical goods and services. All of this drives up the cost of projects and makes operations more difficult to manage.

Agile business processes allow for effective communication between field offices, purchasing, AP, management and vendors. Control is maintained over the availability and the cost of goods and services. Treasury is forewarned of the need to pay for services and products. Project and operations costs can easily be accessed so that action can be taken proactively to improve results. These efficiencies are created by careful design and implementation of supply chain business processes that fit a company's individual profile.

Agile Technology

Technology is the bridge that connects people and business processes to execute supply chain agility. Unfortunately, many organizations are using outdated technology that limits their ability to operate effectively in today's business world.

Agile business processes require automation solutions to operate. Modern technology solutions, including purchasing and invoice automation, help achieve supply chain agility in many ways. It starts with giving you a clear view of spending and the true cost of operations. It deals with the complexity of goods and services and the need to look across several vendor catalogs. It extends to the ability to see financial commitments made as a part of project status. Finally, automation technology provides information that allows the evaluation of materials, vendors and projects so that project and operational performance continues to improve.

In short, automation technology helps shorten organizations' reaction time. Whether a company is scaling back or ramping up, automation facilitates a smooth, streamlined process rather than lurches and jumps. 

It takes organizational discipline to implement supply chain agility. The trouble is most of our experience is based on trying to achieve discipline around broken processes and inadequate technology. Companies can use advanced automation technology to gain more control and visibility over their spending. 

Real-World Applications

So how does all this work out in the real world? A few leading-edge companies have bought into supply chain agility and are already reaping the benefits of automation initiatives. 

Freeing up capital is one of the best ways for companies to become more agile. Seeing the potential savings to be gained from consolidating spending to fewer suppliers, one company implemented an automation system that enabled the purchasing team to consolidate vendors and drive lower prices through higher volumes. 

The system also reigns in "maverick spenders" by providing an online portal where employees can only order from contracted vendors. The company anticipated 4 percent in savings from reduced cost of goods and services through supplier rationalization and greater contract compliance.  With more than $160m in annual operation spend and a $1bn capital budget, those savings equate to at least $6.4m annually. That capital cushion gives the company the ability to better weather uncertainty.

Other firms are creating an agile supply chain through greater inventory visibility. One industrial company used an automated software solution to help them ship a product from Houston to Calcutta. Along the way, the shipment needed to be inspected and inventoried a total of three times in three different locations. 

Each stop also meant currency conversions, expense allocation and detailed tracking. To help monitor each leg of the journey, the automation system created "virtual warehouses" to serve as electronic mile markers. This visibility allowed them to proceed with confidence, something that rarely happens a half a world away. 

Of course, agility won't come overnight, many organizations find that agility is more of a journey than a destination. But with the right people, processes and technology in place, many organizations will be able to position themselves for the future by becoming more agile. 

Source: Verian Technologies