January 19, 2015 by Vince Spadafora
For mid-market companies still using manual supply chains, especially in Procurement/AP operations, now is a fantastic time to consider automating these time-consuming and error-prone practices.
For example, a recent Deloitte study, “Charting the course: Why procurement must transform by 2020,” shows that procurement organizations are experiencing a dramatic shift that the study calls “eye-opening.” New supply chain capabilities and competencies will be mandatory for companies to stay competitive in the very near future. Organizations that fail to embrace new procurement models and technologies will fall further and further behind, jeopardizing overall competitiveness and viability.
At the same time, companies that acknowledge supply chain as a strategic asset achieve 70% higher performance, according to a PwC study. Companies that beat the competition on supply chain performance also achieve significantly better financial results. These “supply chain leaders” deliver on time in full (OTIF) on 95.7% of occasions and have impressive 15.3 inventory turns, while the rest achieve only 3.8 turns.
What this means is that those companies are able to achieve increased efficiency and customer satisfaction without compromising working capital. These metrics directly affect the bottom line: the leaders in the survey enjoy average earnings before interest and taxes of 15.6% whereas the less successful only see 7.3%.
Surprisingly and unfortunately, according to the same PwC study, only 45% of survey respondents say their company views the supply chain as a strategic asset, and just 9% say the supply chain is helping them outperform their peers.
There is a tremendous opportunity here for companies that make the switch. As shown above, supply chain efficiency has a measurable impact on company results – smart companies should be making a shift in that perspective sooner rather than later.
Take a look a recent blog post by Brad Huff, EVP of TAKE Supply Chain, on “The Cost of Waiting” for more insight into the missed opportunities of waiting to implement supply chain improvements.
Supply chain managers need to share this information with top management and ensure that the supply chain is understood to be a major elements in the success – or failure – of their company.
So, your company realizes that your supply chain should be a priority and your procure-to-pay processes need an upgrade – where to start? As your company begins to explore the possibilities, there are some key qualities you will want to look for in a vendor and solution:
Once your company understands the importance of the supply chain to overall business health, you don’t want anything to stand in the way of making the move to a more efficient and agile operation. Get the best of both worlds – an upgraded supply chain with minimal disruption – so that your company can focus on the future.