Supply Chain Digitization: The Reality

By Nick Roquefort-Villeneuve, Global Marketing Director – Amalto Technologies 

Amalto: Supply Chain DigitizationElon Musk, CEO of Tesla and SpaceX, once said, “The supply chain stuff is really tricky.” Is it sleep deprivation (check “Elon Musk should get more sleep” by Arianna Huffington in the LA Times) that prevented Elon from elaborating on what he meant by using the noun “stuff” and the adjective “tricky”? Who knows…?

What I know is that an optimal supply chain process involves the inclusion of top-suppliers (which has been a Tesla challenge from the start, by the way) and the execution of a robust inventory management system (Yes Elon, Toyota didn’t come up with the famous “Just in Time” inventory management methodology randomly).

However, without the automation of tasks outside of the assembly line also known as supply chain digitization, a supply chain strategy today cannot be maximized. Thus, the streamlining of basic manual processes, complex processes and everything in the middle is utterly required to conduct business towards greater improvements and significantly increase an organization’s bottom-line. In today’s increasingly challenging business world, there is no more room for wasting time and energy as well as running the risk of making crucial human errors by continuing to exchange B2B documents such as purchase orders and invoices manually.

Low/No Automation: Challenges

In a globalized business economy, where suppliers and customers from all around the world use different formats and require their own preferred transfer protocols to exchange documents, it’s increasingly difficult to conduct business efficiently. Organizations can easily find themselves overwhelmed by the significant volume and heterogeneity in terms of data and documents they receive. Any manual task, even partial, assigned to the management of the supply chain process becomes quickly time-consuming, considerably slows down business processes (invoicing, delivery, etc.), and generates human errors that can have dire consequences down the road in terms of market share and profitability on both ends of the spectrum, for both the buyer and the vendor.

Automation: Benefits

The main benefit lies in the quasi-elimination of business disruption due to inadequacies in the management of each process. Automation enables the uninterrupted flow and management of documents, data and steps associated to supply chain. Regardless of the demand, PO’s and invoices are treated and generated automatically, approvals are almost instant, items are tracked in real-time (warehouse automation thanks to barcode scanning, among other technologies) and shipped on-time, customers are satisfied and come back, suppliers’ operational costs decrease and their bottom-line increases. At the end of the day, it’s fascinating to compute how many hours of employee labor can be saved per year. For a mid-size company, it can easily be in the 25,000-hour range.

What Type of Automation?

Workflows allow businesses to monitor their supply chain processes and gain agility when required. Naturally, those workflows need to be fully integrated to an AR automation solution. One doesn’t function without the other, and vice-versa. To that effect, it’s crucial to list what an optimal supply chain automation solution truly entails.

There are 3 main elements:

  • Scalability: As business and therefore demand grow, complexity increases. Thus, a solution vendor should have the ability to absorb those changes in a way that is totally seamless to its customer, so the latter can continue to conduct business optimally.
  • Integration: A solution that doesn’t integrate to the customer’s systems is worthless. A solution that cannot integrate to the customer’s new systems is useless. Solely a solution that is 100%-agnostic to existing systems should be considered.
  • User Interface: Without real-time visibility on what is going on, agility is impossible, and the company’s health likely jeopardized. A web-based interface that provides users with an access to workflow-generated options for actions/decisions is key, so the overall supply chain process can avoid disruption. Thus, from the click of a mouse, a decision-maker can resume a process.
Supply chain automation is essential to eliminate frictions and noises. Supply chain automation is required to promote speed, compliance and transparence among trading partners.