The supply chain serves as the connective fiber of a company's core operations. Efficient and well-orchestrated supply chains can enable global operations to navigate the complex web of logistics, regulatory compliance, and financial transactions that span borders and continents.
According to The 2023 Supply Chain Key Issues report from consulting and advisory firm The Hackett Group, more than 40% of enterprises reported having legacy solutions that could be replaced.
There are four crucial elements of a successful supply chain: the people, process, intelligence, and technology. Building and balancing these elements can be critical for an organization's supply chain planning and execution.
Pillar 1: People
Attaining buy-in and commitment from a team is one of the first steps to fostering collaboration and communication among stakeholders. Consider syncing around the need for efficient, transparent supply chain logistics, coupled with payment solutions that support this functionality. With all members of the team heading in the same direction, it is possible to obtain the targeted results.
Additionally, when aligning diverse departments toward a single goal, it can help to reach an agreement about what success looks like. Developing measurable key performance indicators (KPIs) that everyone agrees to and orients their efforts toward can help maintain focus and apply responsibility to each stakeholder on specific metrics.
When working across the company, you can consider deploying cross-functional teams. This can allow leaders to use their unique areas of expertise while maintaining a holistic perspective on organizational effects to pursue goals.
Pillar 2: Process
Forward-thinking executives recognize their supply chain as a strategic asset for growth and profitability.
When evaluating a process, you can consider ancillary factors such as risk management, contingency planning, and compliance with regulations and industry standards. Investing in and reinforcing risk management can minimize disruption and protect revenue and profitability against both expected and unexpected supply disruptions.
Updating payment processes is another area where decision makers might find benefits. According to a 2023 "Digital Payments: Modernizing Procurement Processes" article, which covers a study of CFOs across the healthcare, finance, insurance, retail, and manufacturing, 66% of retailers and 59% of manufacturers believe modernizing business processes is the most important reason to invest in digital procurement technology.
Consider the positive impact that may be achieved by adopting more sophisticated automated accounts receivable and accounts payable (AR/AP) solutions. Modern systems bring a variety of benefits, such as helping to facilitate financial processes like invoicing, payments, and reconciliation across multiple countries and currencies. This often supports a global supply chain by enhancing efficiency, visibility, and cash flow management.
Pillar 3: Intelligence
Next-generation organizations will possibly take advantage of the ability to make data-driven decisions through real-time visibility by tracking supply chain operations system-wide.
This usually allows an organization to:
- Optimize inventory by reducing stockouts as well as excess goods
- Manage costs by minimizing delays and avoiding inventory holding or expedited shipments
- Resolve issues proactively by identifying and addressing them as they occur, rather than reacting to problems once they’ve already impacted operations or customer service
Advanced analytics capabilities to consider deploying include predictive modeling, demand forecasting, and KPI monitoring, all of which can help bring decision makers the insight needed for agile, adaptable systems.
Respondents to the Hackett Group survey cited four key metrics they believe are hindering their Sales and Operations Planning/Integrated Business Planning (S&OP/IBP). Categories they feel are falling short of expectations include production adherence to schedule (70%), days of inventory on hand (64%), excess, obsolete, or expired inventory (64%), and forecast accuracy (45%).
Because intelligence may play a key role in each of those areas, targeted investments in related systems might pay off in both reduced hard costs and increased customer satisfaction.
Pillar 4: Technology
The Hackett Group study further found that 45% of executives intend to accelerate digital transformation, including allocating resources to automation, advanced analytics, and modeling. To that end, the cloud has become the preeminent platform that organizations can leverage to accomplish their goals related to collaboration and data sharing. An Enterprise Strategy Group survey found cloud-related initiatives were named the second most important technological initiative, just behind cybersecurity.
Many companies are also considering the productivity boost that can come from automation and robotics, which can promote a more efficient workforce. A 2024 report from professional services firm KPMG on "The Future of Work" found 66% of employees expect technology to enhance their productivity over the next three years.
Another factor to evaluate may be the impact of sustainability on an existing supply chain: A 2024 report from McKinsey estimates the demand for green logistics to increase from about $50 billion in 2025 to roughly $350 billion in 2030.
These technological updates can entail significant capital expenditures, which might be difficult to source, particularly when companies remain unsure which technologies show the best long-term viability. Carefully weighing the advantages and looking at the long-term potential for return on investment might help your company determine the specific priorities and appropriate investments.
The Takeaway
Resilient supply chains that are both efficient and effective might offer great value to companies. A seamless payment solutions process that facilitates transactions in various currencies, complies with diverse regulations, and provides real-time visibility into cash flows can prove beneficial.
CFOs might look to adopting augmented AR/AP and procurement solutions to help navigate the complexities of the global supply chain through improved processes, data-driven sourcing decisions, digital supplier management, and enhanced overall supply chain financial operations across borders.
