By Mickey North Rizza, Group Vice President, Enterprise Software, IDC
The digital world has ushered in new opportunities to leverage technology to automate every workflow imaginable, including supplier collaboration. In fact, companies that have digitalized their supply networks to enable visibility and collaboration with trading partners are better positioned in times of disruption. According to IDC, digital technology is credited with playing a significant role in improving agility and resilience for 85% of global organizations over the last two years.
Systems that can automatically generate and share business documents help to improve visibility, increase collaboration, and reduce the risk that documents are either lost or unable to be accessed in a timely manner. Automation also frees staff to work on higher-value tasks. However, progress has been slow on this front, and significant opportunities for improvement remain.
IDC sought to understand how upper management views the challenges and opportunities with respect to supplier collaboration and how that perspective differs from that of front-line managers. IDC's
Global Supply Chain Business Collaboration Networks Survey (August 2023) polled more than 1,506 organizations about supplier collaboration across multiple dimensions. Respondents represented the following organizational personas: manager, director, vice president, and C-level executives, with the highest concentration for all personas in purchasing/procurement, followed closely by IT.
What we found is that organizations want better systems, regardless of persona perspectives. Organizations and their personas both agreed that a business network to collaborate with their suppliers would be most beneficial.
Transmission and Receipt of Supplier Documents and Information
Email was identified by all personas as the most common way to transmit/ receive documents or information relevant to procurement and collaboration with their supplier base. But while the C-suite, VPs, and directors cited enterprise collaboration tools as the next most common way to transmit/receive supplier documents and information, managers cited the phone.
The survey also highlighted that organizations still struggle with the use of their current systems as they seek to transform their supply chain. However, the challenges, costs, and pitfalls encountered were perceived differently based on persona. C-Suite, VP, and director level respondents cited information accuracy as their number-one systems issue. Meanwhile, managers specified a lack of collaboration with suppliers, carriers, and other trading partners as their top challenge.
When naming their number-two concerns, perspectives differed widely. C-Suite respondents cited errors due to version control and manual entry of data; VPs identified a lack of collaboration with suppliers, carriers, and other trading partners; directors pointed to systems outages; and managers called out information accuracy.
As the data points show, managers clearly have a different take on the challenges above than do directors, VPs, and the C-suite. This divergence is likely a result of being closer to the action and seeing employees struggle to work with the supply base. Yet all agreed that the real challenge is to find the tools and systems that will help organizations address these issues while moving to technology systems that automate as many supplier processes as possible.
Manual Processes Still Prevail
Manual processes are still very much alive. All personas indicated that 40%-50% of processes that originate from their ERP system are mostly system generated but manually shared (e.g., purchase order and forecast documents). Looking across all personas, 39%-44% stated their ERP systems were mostly integrated, with extensive document sharing across all internal systems for supplier collaboration. When asked what benefits they achieved from the integration, C-suite respondents said it made them more efficient at their jobs, VPs said it enabled them to address quality issues sooner, and directors and managers said it improved their information accuracy.
Automation Enhances Supplier Collaboration Value
The survey also looked at the automation process overall. It found that only 17% of respondents used automation to handle supplier collaboration processes. Among this small group, C-level executives as well as managers believed the greatest benefit of an integrated ERP system that enables supplier collaboration was that it made their jobs more efficient. Directors felt it improved their information accuracy, and VPs felt it gave them better information timeliness. In addition, the survey also looked at the cycle-time improvements of automating manual processes and found they were reduced to 1-4 days on average.
Visibility is clearly an issue for all. Personas differed in their visibility concerns: For the C-level it was about supply chain planning; for the VP, director, and manager it was about the end-to-end supply chain. In addition, all personas felt that it takes them 2-4 days to react to change. When we asked survey respondents about methods to improve agility, flexible inventory was the top answer given. By persona, the C-level believed flexible product designs and multi-sourcing abilities were also important, directors and managers believed flexible transportation was critical, and VPs cited the need to move to cloud applications.
All respondents noted that their current level of collaboration and/or visibility restricted their ability to effectively manage disruption (such as weather, geopolitical conflicts, or workforce upheavals). The top-cited challenges when reacting to disruption were having fragmented/incomplete information or information that is not timely.
Collaboration is an opportunity not to be missed in a volatile business environment. While personas and levels differ in their perspectives on the details and workflows, it is clear the real challenge is to find the tools and systems that will help organizations address these issues while moving to technology systems that automate as many supplier processes as possible. All organizational personas agreed that close collaboration with suppliers is critical to success in a time of disruption. Organizations therefore must move toward enhanced visibility as well as better systems and business networks to collaborate with suppliers. Both are critical to automate supplier/buyer processes.
Download the full report, “Driving Best-in-Class Supply Chain Collaboration with a Business Network” or watch the webinar featuring Mickey North Rizza for more insights on supplier collaboration and business networks.
