Pivotree Commerce, Data Management & Supply Chain Blog

Is your supply chain and B2B environment right for 2011 and beyond?

by | Aug 30, 2011 | Blog, Supply Chain

Companies are starting to re-evaluate how the changing business environment can or has impacted their organization. The change to a global economy has created increasing numbers of variables in today’s business landscape. Examples of these changes include increased customer demands, greater complexity within the global business network, and compliance constraints. Additionally, the recession has resulted in a greater increase in the preservation of working capital. Companies have started reassessing their supply chain strategies and approach which is the first step.

Companies are rapidly concluding that their ability to quickly change or adjust business processes is becoming increasingly important to their enterprise. A key area is a company’s flexibility in B2B or integrated environments. In today’s environment, companies are working with fixed or reduced budgets, while doing significantly more work than in past years. This includes operating with mandates to lower costs and integrating and onboarding more complex partners and customers while accommodating more rigid service level agreements.

In order to achieve a true B2B, collaborative environment, companies must first look internally. These internal systems (and departments), cannot merely share information (which is usually the case), but need to accommodate an enterprise-wide system of combined functionality with real-time, day-to-day information flow…an inter-departmental, or internal B2B information backbone. The information backbone must allow information to flow throughout an organization while crossing those departmental boundaries. At the same time, this collaborative environment must also extend to accommodate external partners.

Despite all of this focus on B2B and collaborative systems, a top process and research consulting firm found that most companies are still not good at managing Orders (both for customers and vendors). In addition to impacts on information flow, these changes in economic and global customer complexities also have huge impacts on organizational supply chains. This increasing supply chain complexity, risk and pressure include:

Globalization

As regional supply chains become more global, order processes more complex, often exponentially. Mergers and acquisitions only increase this complexity.

 

Order density

In emerging economies, companies are taking more orders to ship the same volume. Not only has the volume of orders increased, but the terms for an order also are more complex and there’s less automation.

System decay

A successful ERP implementation can improve both order reliability and cycle time. However, processes decay, and order processing discipline wanes over time. This requires constant focus and discipline (something most companies have lost sight of.

 

Proliferation of order types

The number of ways an order can be processed has exploded, with many systems not keeping pace.

These areas of complexities not only impact data issues but also have an impact on physical process & product issues. Today’s Order complexities may also consist of a bundling of services, which may include light assembly, specialized delivery, installation, or other value-added services. This escalates the need for an intelligent system with the ability to configure and manage workflows around orders; among all departments, vendors, and systems that touch these orders within their life cycle.

Globalization and order density are increasing which also increases the operational and supply chain potential issues. These issues eventually trickle down to all aspects of the supply chain and associated fulfillment processes. Companies are sourcing from and selling to more new regions, which often require the addition of new carriers, freight forwarders, and distribution partners to their network. At the same time, customers are continuously demanding flexibility in delivery services and shorter order fulfillment timelines.

In a recent supply chain-focused survey of over 128 companies, a top process and research consulting firm found that companies are admitting it is not easy servicing a global market. Having an effective and flexible supply chain, in addition to systems that can accommodate new international markets and order demands is just as, if not more important to achieve customer satisfaction and improved profit margins while controlling costs. Over the past year, fifty-eight percent (58%) of companies suffered financial losses as a result of supply chain disruptions. In B2B order processes, reducing manual intervention is important. When orders can move through the system without manual intervention, there is a 30% order cycle time improvement and a 5% to 10% higher customer service level. For most industries, this represents a day of working capital reduction and a potential 2% revenue improvement.

As in all cases, identifying the problem is usually the first step. Bridge Solution understands that an internal capabilities assessment is a good first step, but what should be done next? It’s not only important to identify key problems and issues. It is just as important to define the right solutions and their associated business value. These solutions (or resolutions) can then be placed into a roadmap and execution plan along with aligning with company strategies as well as budget constraints. Bridge Solutions takes this a step further; once this plan has been defined, it would be easy to say, “you need to upgrade your current WMS…” or “ you’ll need to sunset that legacy system and implement a ‘best practices’ so and so..”. We believe that not only is it important to develop a well-defined, detailed roadmap, but to work with organizations to fit this roadmap within their immediate, tactical needs while aligning with their long term strategy.

The Bridge Solution team continues to provide solutions for these changes with our current clients and partners. We’ll continue to share our thoughts and strategies to achieve the collaborative B2B environment within the supply chain. This is the first, of a multi-series write-up, that will focus on overall supply chain issues resulting from external impacts (such as growing, dynamic markets to economic changes) and internal process and technology weaknesses.

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