Procure-to-pay automation is the best digital transformation hack there is
Here’s the thing: you want to impress. The problem is, you work in the supply chain, and the supply chain is all about operations. Operations aren’t what most people consider fun or impressive. But “blockchain” is. So you’d like to put blockchain in your supply chain because then, everyone will be impressed.
But here’s the other thing: nobody really cares about blockchain. What they really care about is “digital transformation.” Blockchain is just cool hipster technology, one that a lot of people hope will bestow digital transformation. But digital transformation is the thing, it’s the phenomenon of our time. And thankfully, you can pull it off, and legitimately take credit for it, without conjuring up any blockchains or IoT or AI. Here’s how.
Shipping goods across the world is serious business, but the associated paperwork is amazingly bad
How many million times have we talked about supply chain visibility? Everyone agrees—you should be able to know where your stuff is, anywhere in the world, at any moment. So when we talk about digitizing the supply chain, we get excited by the thought of sticking some IoT homing beacon onto a shipping container to track it. But that’s just a small part of the digital supply chain story.
The stuff in that container has a history. Somebody ordered it, somebody made it, somebody sent it on its way. There’s paperwork associated with all of that, and often, it’s manual paperwork—which is messy, tedious, and bad. If you can make that stuff less manual, you’ll be well on your way to becoming a digital business.
The procurement process doesn’t have to be slow, redundant, and full of errors
The flow of materials in the supply chain starts with sourcing. Then you create an agreement with your vendor and a blanket purchase order, and then individual material releases against the blanket PO, and finally, the invoice. Then, there’s the final settlement. In each of these stages, people often reenter data multiple times. That’s a mess—you have a lot of manual data entry, versioning issues, time delays, and rekeying errors. Instead, you can automate the entire process.
The original data from each stage can be reused in subsequent stages, without having to reenter information. For instance, data from an RFQ can be used to generate a contract, and data from the contract can be used to create the PO, and data from the PO can be reused in the vendor invoice. Finally, you can have intelligent three-way matching that compares the PO, the invoice, and the receiving report and settles payments or alerts you to issues.
A gold sticker for digital transformation
Automating the procure-to-pay cycle increases visibility and speed, and frees up people for more strategic activities.
More importantly, it brings your supply chain closer together through technology. Honestly, that’s the real value of digital transformation.
Supply chains are far-flung and complex, and the gaps between their various pieces are the cause of most headaches and problems. By digitizing the procurement cycle, you can create a smooth flow for the financial and information side of the supply chain. Everything becomes quicker, more transparent, more responsive, and easier to adjust.
That’s impressive. And real. So maybe do that first, and worry about blockchain later.