Supply Chain

Digital transformation: Next Gen procurement and supply chain

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Procurement and supply chain are at the cusp of a disruption with AI, IoT and blockchain technology. A digital transformation is ensuing with the promise of greater efficiency in business processes, operations, transparency and security. Just look at some of the news trending in the tech world right now with Walmart using blockchain to trace food from farm to shelf. UPS is also using big data to improve performance. And even in the entertainment industry, where Neflix is using big data to predict the success of “House of Cards”.

Chief Procurement Officers (CPOs) and supply chain management leaders are now equipped with volumes of data generated using IoT, social media and big data available in the public domain. The biggest challenge for today’s business is to quickly recognize this opportunity and stay ahead of the game.

Here are some things to consider for the next generation of procurement and supply chain.

Spend analysis

Spend analysis used in strategic sourcing, needs a shift from the traditional descriptive analytics model to more predictive and prescriptive analytics. Organizations can develop tools to enhance their spend analysis with public domain data — from social media, weather data, demographics, suppliers, competition and logistics to name a few — to help uncover insights that can save money and improve supply chain. The key is to recognize the need to reinvent the objectives of spend analysis and fish for insights for better outcomes!

Add greater visibility and efficiency across the entire supply chain

Supplier lifecycle management

The traditional supplier lifecycle management platform, when augmented by big data from the public domain, can offer meaningful information on suppliers and supply chain risks. For example, monitoring the social media trends on financial stability of the suppliers can help identify supplier risk. This information can also be used for negotiating better deals with the suppliers or as an input to supplier evaluations which eventually enable smarter outcomes. An IoT solution can be employed to track the quality of the product at various stages of the supply chain thus improving the efficiency in the process and providing the metrics for supplier evaluation.

Strategic sourcing

Sourcing is a fairly complex business process with stakeholders from cross-functional teams. Supplier bids are collected using online sourcing events, but a large part of the sourcing evaluation and award process is manual in nature. Using blockchain for through all steps of the process — proposals, quotes and bids — or auction, can offer greater efficiency and transparency. The adoption of new technology, tools or techniques should be evaluated based on the savings opportunities and sourcing complexity.

Contract management

Inefficient contracting can cause inadvertent losses to business, and some of the biggest challenges in contracting is to track compliance and obligations. A blockchain platform and its smart contract framework coupled with IoT and AI, can help facilitate greater efficiency in compliance and obligation management. AI can help develop smart wizards to build contracts based on responses to specific questions and can further be enabled for pattern recognition to identify changes to standard clauses or introduction of non-standard clauses. Blockchains are immutable and therefore it may be possible to eliminate the need for electronic signature in near future.

E-Commerce and online stores

A blockchain-powered solution can provide a robust platform for suppliers and buyers to collaborate and manage an online store. The smart contracts can be enabled to validate all the rules required for business compliance, regulatory compliance, obligation management and more. The supplier ratings and reviews from an e-Commerce site can be integrated with supplier evaluations and risk. The e-Commerce platform can potentially evolve as a self-managed platform allowing the suppliers to add their products online and buyers to transact on this platform within the constraints defined in the smart contract framework.

Order management

The traditional order management system is internal to any organization and facilitates the fulfillment process. Blockchain platform powered with AI and IoT can drive greater efficiency in orchestrating and streamlining purchase orders, shipment details, trade documents, goods receipts, quality assurance documents, returns and accounting. This exchange-to-exchange orchestration is very promising, and advanced analytics can help facilitate visibility across the entire supply chain ecosystem sending alerts whenever there is a disruption.

Logistics

The logistics industry is an early adopter of AI, IoT and Blockchain, and is already reaping great business benefits. IoT in the logistics ecosystem can provide great insights on inventory management, shelf life, storage temperature, delivery routes, real-time tracking of freight and more. A recent example is that of joint venture between IBM and Maersk, who have recognized the potential and embarked on digitizing their global trade and supply chains.

Exciting times are ahead with new technologies, new challenges and newer opportunities. Procurement practices will never be the same and supply chain operations will transform in ways we never imagined. Adopting these new technologies and practices is the new normal and early adopter stand to gain in the market place.

Deploy the IBM Blockchain Platform across multiple environments

Managing Consultant - Global Business Services

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