Supply chains are working harder than ever to evolve and adapt to current market challenges. COVID-19 was a wakeup call for procurement teams who failed to invest in the tools and resources necessary to protect their supply chains. Their lack of visibility led to an uncoordinated response, which was exacerbated amid ongoing disruption.
But there’s a secret weapon that many companies are underutilizing: transactional data. While organizations often trade transactional data, such as purchase orders, invoices and shipping documents to ease communication, it’s less common that they draw on the same data for more meaningful insights.
This is a missed opportunity, as transactions flowing through a network of buyers and suppliers provides data that can support benchmarking, indexes and overall improvements to the supply chain. Companies can and should take advantage of the deeper “intelligence layer” presented by real-time data and work to drive efficiency on a global scale.
With access to transactional data, procurement leaders can identify spend patterns and indexes more intelligently and with greater precision — for example, quickly identifying supplier discrepancies such as overcharges or late payments. Armed with this information, businesses are able to assess their buyer-supplier relationships regularly, renegotiate payment terms as needed, and possibly even shift to more reliable and transparent trading partners.
At a basic level, access to transactional data creates opportunities to increase savings, reduce risk and improve compliance. In today’s volatile economy, having greater visibility into these patterns allows companies to be more competitive and resilient in the global market.
Additionally, engaging partners across a third-party ecosystem that encourages trusted relationships helps speed decision-making on both sides, decreasing transaction costs and increasing optimization.
While deeper insight into sourcing and spend is important for businesses of any size, it’s especially significant for large enterprises with customers around the world. Nufarm, an agrichemical company, has a customer base across 100 countries. As its business expanded, Nufarm shifted from a regional sourcing approach to a more connected, collaborative process.
With a centralized procurement process in place, Nufarm achieved an 80% reduction in the number of invoices that didn’t have a valid purchase order in place. With greater visibility and control over process approvals, payments, purchase orders and invoices, Nufarm realized greater procurement efficiency and savings.
As data and intelligence converge, businesses will see a more rapid move toward automation. Intelligent technologies like machine learning are already being incorporated into transactions to detect risk, fraud and compliance issues. COVID-19 has illuminated the dangers of fractured supply chains, as well as the importance of accurate forecasting. Having the ability to mine internal and external data and analyze it in real time can prevent major supply-chain disruptions and enable procurement teams to mitigate losses.
To influence business outcomes amid disruption, today’s procurement organizations need to take advantage of the massive data exchanges that are happening every day within their supply networks. By using transactional data and collaborating with network partners, they will become more intelligent and efficient, and able to withstand future challenges with greater ease.
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