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It’s time for supply chain management to move beyond spreadsheets

It’s time for supply chain management to move beyond spreadsheets

By Nick Rose, CFO at Enable

Supply chains have never been more complex or interconnected than they are right now. While this means companies are able to manufacture and distribute products far more efficiently, it has also presented a vast range of logistical challenges – from maintaining visibility across the supply chain to keeping track of rebate agreements and other contracts designed to maintain smooth and productive relationships between suppliers, distributors and end customers.

However, far too many companies still rely on antiquated methods of monitoring and analyzing their supply chains, such as Microsoft Excel sheets that require employees to input and update data manually. These methods aren’t just prone to human error and manipulation as I’ve personally found in previous roles – they also require employees to dedicate many hours to processes that could be done far more quickly and affordably if they were automated.

This is why digital supply chain solutions are becoming more and more essential. Companies need sophisticated methods for identifying potential problems in the supply chain (as well as areas where processes are performing well) – plus they have to be capable of managing an array of relationships, keeping track of the agreements that underpin those relationships, and adjusting to changing economic circumstances in real time. With digitized supply chains, companies will have less exposure to risk, more efficiency, and stronger relationships.

An overdue digital transformation

No field stands to benefit more from digitization than supply chain management, but the industry has been slow to recognize this fact. McKinsey reports that supply chains lag behind other business areas when it comes to digitization, while a recent survey conducted by Enable found that more than a third of companies are still using spreadsheets to manage deal negotiation, documentation, and management – let alone calculation, allocation and cash collection/payment.

This slow process of digital transformation has had a dramatic impact on companies’ bottom lines. According to a report by IBM and the National Retail Foundation, supply chain executives say automation has the potential to increase revenue by 10 percent every year. When Gartner asked supply chain leaders if resilience, agility, and visibility are adequately built into their supply chains, just 21 percent said yes. But 55 percent of respondents say their supply chains will have those characteristics in the near future.

The past year has driven companies to invest in the digital tools that will help them be resilient and agile in response to future crises – according to Gartner, 50 percent of supply chain organizations say they’re prepared to invest in “applications that support artificial intelligence and advanced analytics capabilities.” Considering the fact that 94 percent of Fortune 1000 companies say they experienced disruptions to their supply chains as a result of COVID-19, the move toward digitization clearly can’t come fast enough.

Manual processes are a drag on supply chains – and profitability

While manual tools like Excel spreadsheets are capable of managing simple tasks and small sets of data, they can’t cope with the demands of modern, complex supply chains. Take rebate management, for instance – suppliers and distributors are increasingly negotiating complicated rebate agreements that account for shifting market conditions, inconsistent annual turnover rates, and many other variables that have to be tracked simultaneously. The more dynamism in their deals, the more nimbly companies can react to changes in the market.  However, these agreements are often already far too intricate and dynamic for a simple spreadsheet to track with any reliability.

According to a survey of 1,700 companies, 81 percent say they don’t have full visibility into their supply chains, while 54 percent have no visibility whatsoever. This is another area where manual data processing and analysis can lead to huge problems – today’s supply chains have many moving parts, and companies need consistent real-time updates on how these parts are operating. When suppliers and distributors have access to shared information via a single digital platform, they can communicate more easily and make adjustments as necessary.

Beyond helping companies manage complexity and providing visibility across supply chains, digital tools can also save thousands of hours and huge sums of money by making backend processes more streamlined. It’s no surprise that a report by The Center for Global Enterprise found that digital supply chains could secure a 50 percent reduction in costs – a reminder that companies are leaving money on the table every day they continue to delay digitization.

Taking advantage of digital resources in the post-COVID era

The COVID-19 pandemic has given companies powerful incentives to change their approach to technology adoption. The supply chain disruptions and resulting economic contraction reminded companies that flexibility, communication, and data visibility are crucial at all times – not just in the middle of a crisis. This is why a recent IBM survey found that 66 percent of supply chain executives “have completed technology initiatives that had previously encountered resistance” before COVID-19. Meanwhile, 62 percent say digital transformation is a top priority – up from 20 percent only two years ago.

Our survey found that 56 percent of supply chain professionals say their companies will be renegotiating B2B deals once pandemic restrictions are lifted. We also found that 4 percent of supply chain rebate revenue goes unclaimed, which means companies are potentially surrendering millions of dollars due to outmoded and ineffective rebate management processes. Almost two-thirds of companies have problems with their current deal management practices, such as a reliance on time-consuming manual processes, the inability to report and forecast properly, and the failure to deal with multiple data sources.

There are digital solutions to all of these problems. Digital platforms can manage and analyze contracts, monitor supply chain performance, track and deliver payments, and provide an all-important audit trail whenever a dispute arises. When companies have access to these platforms, they can build healthier relationships with their partners and ensure that every link in the supply chain is as strong as it can be.

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