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SAP: the complexity of a modern supply chain

Chris Haydon, President, SAP Procurement Solutions, discusses the complexity of modern supply chains.

|Aug 2|magazine12 min read

For most people, the bauxite mines dotting the coastline of rural Weipa, Australia, might seem like the ends of the earth. But for the world’s aluminum producers, the massive deposits of ore they contain represent the beginning of complex supply chains whose end result is the airplanes in which we fly, the siding with which we cover our homes, and the foil in which we reheat our meals.

On a personal level, the mining industry represents yet another beginning: my journey into the procurement business. When I set out on my career three decades ago, I could scarcely have imagined that cloud-based digital technologies would someday render places like Weipa less remote, supply chains more transparent, and business-to-business commerce more immediate. Yet certain lessons from those early days in the mining industry remain unchanged despite the years.

Above all, buyers and suppliers demand a positive outcome experience in the form of tangible results. Years ago, that meant delivering on time, per specifications, at consistently high quality. It meant keeping one’s word. It meant investing in relationships for the long run. Today, these same priorities hold true—but it’s also about expecting more from our spending and the way we manage it by taking greater advantage of data, insights, and advanced analytics. And it all starts with procurement.

Procurement networks equip business leaders with the visibility needed to maximize customer value. In addition, the transparency they make possible creates an ecosystem within which organizations harness the data-driven insights they need to anticipate disruptions to the supply chain—whether natural disasters or labor unrest or even armed conflict—and remedy them before they can dent the balance sheet. The next generation of procurement is bigger than transactions. It’s bigger than processes. It’s strategy and execution to drive real value, real results, and real impact for organizations. This is the next step forward in intelligent spend management.

SAP’s Ariba Network, for example, has the powerful ability to help during times of crisis, enabling organizations to manage risk and keep the promises they’ve made to customers. In fact, in response to the current state of global supply chain disruption, we have opened access to SAP Ariba Discovery so any buyer can post immediate sourcing needs and any of the 4 million suppliers on Ariba Network can respond at no cost through June 30, 2020. For additional details, visit https://my.ariba.com/Discovery.

There must be trusted partners within the supply chain. To deepen that trust, a 360° view of spend is critical. This newfound visibility, possible through a cloud-based business network, extends to all categories, from direct, maintenance, and indirect goods to external labor, which on average comprises 42% of an organization’s total workforce spend. From the insights gained through intelligent spend management, businesses achieve tangible results and measurable outcomes grounded in predictive analytics.

Meanwhile, keep in mind that digital networks create efficiencies in other ways too. They unshackle procurement professionals from the tactical tasks traditionally associated with the source-to-pay process by eliminating full steps, thanks to machine learning and robotic process automation, freeing up personnel to focus on strategic activities, such as collaborating with trading partners on product development, shaping a mutually beneficial outcome experience, integrating corporate social responsibility aims into their operational systems, and shoring up the effectiveness of their supply chain.

Years ago, effectiveness in the supply chain—or in any endeavor, for that matter—required cementing the bonds of trust with the diverse sets of people who rely on each other’s success. The same principle remains true today. When I worked in Weipa, the people most vital to success, apart from our end-of-line customers and the traditional owners, were our miners. Still, no matter how different the cultures that converged there, we all put customers first.

Fast-forward to 2020, and digital networks reinforce the very same customer-first mentality—one that also offers a wider opportunity for diversity and inclusion but across greater distances and broader sets of stakeholders. For example, a procurement platform, aided by artificial intelligence, can ascertain whether one’s trading partners award business to organizations owned or managed by historically underrepresented groups of people. It can also determine whether a potential partner has in place the governance structures necessary to root out forced labor from the supply chain or to ensure the responsible stewardship of natural resources. In times of increasing complexity and uncertainty, business leaders must balance responsiveness with responsibility.

Across operational and reputational factors, digital networks extend visibility to encompass the full circle of procurement and supply chain requirements. Yet, in a sense, they bring me full circle as well. From my humble beginnings in Weipa to my current role in Silicon Valley, much has changed in the technology of procurement, elevating it to the forefront of competitive advantage. What endures is the paramount importance of relationships and the need for business leaders to seize the technology available to fortify them.

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