The world doesn’t just feel more frightening in the wake of Covid-19: it really is, at least for the majority. Almost overnight, businesses went from robust confidence in the strength of their supply chains to worrying about an increasingly tangled web of risk – from Acts of God like pandemics, to rising geopolitical tension, cyber attacks, economic uncertainty, and the impact of new tariffs and regulations such as Environmental, Social, and Governance (ESG) standards.
Supply chain leaders once struggled to get an audience with the C-Suite. Now they’re being hauled into boardrooms and asked what they are going to do about the 25% tariff that’s suddenly been slapped onto a key component.
It’s a tough question, but a necessary one: how can supply chains designed for speed and cost pivot towards resilience while remaining nimble enough to adapt to new regulations worldwide? Equally important, how can they turn today’s uncertainty and risk into a competitive advantage?
Bonfire of the Paper Processes
A recent report by EY suggests an answer: Businesses are beginning to transition from linear models towards networked supply chains that promote visibility and agility through end-to-end digitalization.
And not before time. Global trade continues to be incredibly reliant on slow, ‘dumb’, and error-strewn manual processes. Many of these are still heavily paper-based, with an estimated four billion physical documents moving through the supply chain every day.
Identifying potential issues and improving processes is only half the battle, however. Before COVID, many supply chains were either single-sourced or heavily sourced in one region or one country. The lack of a plan B and even a plan C forced businesses to ask some pretty hard ‘what if…’ questions.
Research by Cap Gemini found 68% of organisations are actively investing in diversifying their supplier base. Companies like Apple are moving production from China to more politically neutral countries such as Vietnam, Mexico, India, and the Philippines.
Reconfiguring supply chains on this scale is complex, requiring rapid identification, vetting, and onboarding of new suppliers. Shifting demand patterns necessitate digital connectivity that allows real-time collaboration between buyers and suppliers.
Diversification efforts will fail if underlying systems remain outdated. Failure to digitise and automate these processes denies businesses the insight, agility, and speed needed to respond to changing social, economic, and geopolitical landscapes.
Getting on board with digital
People have been predicting the “paperless office” for decades, and some will say that digital supply chain initiatives will see the same lack of success as other predicted “bonfires”. This time, it’s easy to prove the cynics wrong, simply by pointing to how businesses are already building robustness and agility into their supply chains by moving to all-digital platforms.
Consider the traditionally paper-intensive supplier onboarding process. Digitalization speeds up and simplifies this process and lays the foundation for greater agility and end-to-end visibility.
Analyst firm IDC highlights how cloud-based B2B marketplaces eliminate outdated processes, allowing businesses to reorient their supply chains towards resilience. Historically, these digital marketplaces have focused on goods rather than the more difficult services.
However, this landscape is also changing as highly complex transactions are now becoming possible through emerging service-oriented marketplace solutions. These marketplaces provide access to a large selection of pre-vetted suppliers in multiple locations. They offer buyers choice, transparency, and competitive pricing.
Revolutionising Supply Chains with Digital Marketplaces
Access to a networked marketplace environment gives buyers choice, transparency, and competitive pricing. If a buyer is in the automotive sector, for example, they will benefit from group buying on a dedicated marketplace for direct materials. They can also access other marketplaces for indirect spend, such as office supplies.
Crucially, this can all take place on a single platform and through a single user interface. The ability to navigate such networked marketplaces via a single platform is still an emerging development. It could be good news for all, thanks to industry evolution at just the right time.
Marketplaces are much more than vast online emporia, though. In addition to supporting the move from linear to networked supply chain models, the B2B marketplace model provides a ready-made environment for the automation of business processes. This has significant implications in key areas of the traditional source-to-pay process, where supplier identification and onboarding remain significant hurdles.
In fact, it’s impossible to conceive these new, more robust, more agile global trading networks without digital platforms.
As businesses’ supplier ecosystems become more geographically diverse, the range of regulatory and compliance demands they encounter becomes much wider. Under the old paper-reliant regime, that would put enormous strain on legal and compliance teams just to manage on-boarding, let alone the almost daily work of ensuring they are compliant with new regulations and mandates across every territory. This is yet another area where the all-digital approach shows its mettle.
Streamlined Compliance
The benefits of having access to a large number of pre-vetted suppliers don’t end at the on-boarding process. Access to pre-vetted suppliers enhances negotiation, contract management, and compliance checks. In many cases, buyers can effectively outsource due diligence requirements to the marketplace operator. The operator is then responsible for serving up suppliers that tick the right boxes.
Checks can be tailored to individual businesses’ requirements. For example, to meet local regulations, or in the service of corporate values, focusing on key areas of risk such as forced labour, cybersecurity, and environmental practices.
B2B marketplaces dramatically improve compliance efficiency, supporting automated transactions at scale, including straight-through processing.
They enable businesses to confidently navigate compliance concerns and the fast-changing geopolitical and economic environment. Importantly, they ensure that their future is in their own hands.
- Collaboration & Optimization
- Procurement Strategy
- Sourcing & Procurement
