Digital Supply Chains: Part Three – Delivery Management, Contract Management, Procure-to-Pay

This blog post by ChainLink Research Chief Research Officer Bill McBeath is excerpted from the report “Getting Real with Workflow-Enabled Digital Supply Chains,” available for download here.

Part Two of this series explored real-world examples of digitization of the supply chain in the areas of supplier management, field service, and MRO (Maintenance, Repair, and Operations). Here in part three, we continue with examples in delivery management, contract management, and procure-to-pay processes.

Delivery Management

Sophisticated best-of-breed delivery management systems provide rich functionality, such as truckload mapping, container management, dispatching, scanning into the truck, condition monitoring, and more.

Digital Supply Chain Nintex

While these types of systems may be suitable for companies with a large fleet, for whom delivery is a critical core competency, they are often overkill for the many more companies that have modest-sized fleets or for whom delivery is less central. Those companies can realize much of the value they need by implementing a few targeted workflows, for doing things like scanning items onto the truck during loading, scanning items upon delivery, installation and/or repair instructions sent to the repair person’s mobile device, real-time adjustments (OS&D) at the point of delivery, photo capture of any damage, customer signoff at delivery, clean and final invoice upon delivery, and electronic proof of delivery. These can dramatically improve the accuracy of deliveries, reduce disputes, and accelerate invoicing and payment.

The advantage of a workflow-driven approach is that you can start small. For example, tremendous value can be realized simply by scanning orders at pickup and dropoff. That alone saves time, increases accuracy, reduces disputes, and accelerates time-to-invoice.

Supply Chain Risk Management

Managing supply chain risk has become increasingly important. This includes things like:

  • Mapping out a company’s physical supply chain—Knowing exactly where each supplier’s factories are located, and which components and materials they produce there for the company.
  • Disruption response/Business continuity management—The ability to avoid and recover quickly from disruptions to the supply chain, IT, and operations.
  • Supplier risk management—Knowing risks about each supplier, such as financial stability, performance risks, security, employee vetting, legal risks, reputational risks, insurance, and so forth.
  • Compliance management—Ensuring compliance with laws and regulations, standards of conduct, and customer mandates.
  • Supplier performance management—Ensuring that quality and performance goals are met.
  • New product launch risk management—Contingency planning, monitoring of launches, and rapid response as alternate scenarios emerge.

Many of these activities involve continuously collecting a lot of data from many diverse sources, mini-projects involving several parties and steps that must be completed in a timely manner, and the ability to continuously track progress against goals—all things that workflow platforms excel at. Examples of supply chain risk management workflows that can be implemented include:

  • Surveys and data collection—Workflow automates the sending of surveys to collect information from suppliers, employees, and systems, as well as reminders and escalation when the information is not provided within specified timeframes.
  • Compliance—Workflow can initiate and track compliance to processes, ensure training is being completed, and that proper licenses and certifications are collected.
  • Contingency planning and execution—Create, practice, execute, and monitor contingency plans. These might be contingency plans for new product launches, business continuity plans, or types of events.
  • Audits and inspections—Automating audits, inspections, and any other risk checklists.
  • Monitor and respond—Triggering workflows to respond quickly to events as they arise.

Many of these supply chain risk management functions can be integrated into supplier onboarding processes, as well as ongoing supplier management. Workflow provides much more reliable and detailed audit trails, which can be used to thwart supplier and supply chain fraud. Certificates can be automatically stored in a central content repository. Data from all these activities can be used to feed dashboards and various analytics.

Contract Management

Contract management is another area where excellent best-of-breed systems exist. For supply-side contracts, the contract management system may be integrated with sourcing and procurement systems so that they can ingest content from the winning bid for an RFQ and place that into a draft contract, pull from clause libraries to create the right contract language, provide redlining and rules-driven approval workflows, store digitally-signed, executed contracts in a central, searchable repository, and drive contract compliance downstream in P2P (procure-to-pay) execution.

However, not everyone needs a full-blown contract management system. They may get most of the value they need by automating the contract review and signing process, or by automatically pulling together the right data needed to create the contract.

Automating Contract Approval Routing, Signing, and Updating of Execution Systems

One manufacturer has implemented workflows they created to automate review and approval of contracts, the digital signing of the contract, and automatic archiving of contracts. At the end of this process, the workflow configures their ERP system to accurately reflect their contractual obligations (such as minimum purchase volumes), volume discounts, and other parameters. This ensures that these elements are driven into the execution phase and not forgotten.

Home Builder’s Automatic Generation and Sending of Contracts

A major developer and builder of residential homes and communities works with many different contractors on each construction project. After an agreement has been negotiated and reached for services in a construction project (such as installing the drywall or plumbing), then a legal contract is automatically generated by Nintex DocGen for Salesforce using information drawn from the builder’s ERP system and Salesforce, along with other information entered by their legal team. That is sent to be digitally signed by both parties.

Next, they send a ‘contract confirmation’ document, which is also automatically generated. This describes the job, agreed rates for labor and materials, and other details. The system pulls that information from ERP, Salesforce, and procurement systems. The workflow automatically sends these documents and if the supplier hasn’t responded with a certain number of days, a reminder is sent. This system saves a lot of manual effort, makes the contracts and confirmation documents more accurate, and ensures timely execution of contracts.

Procure-to-Pay

Procure-to-pay (P2P) systems automate the process of helping employees find the goods they need, submit and route purchase requisitions for approval, create and send purchase orders (and receive acknowledgement), track order status, receive and match invoices against POs and goods receipts (and sometimes against other payment criteria such as inspections), and approve payment. Many of these functions can be performed with workflow platforms; for example, requisition routing and/or invoice routing for approval are great fits.

Automating the Creation and Sending of RFx and PO Packages

A number of companies are using workflow and automated document generation to create RFQ, tendering, and PO packages. These packages typically have repeatable, templated cover letters and components, such as submission instructions, specifications, terms and conditions, selection criteria, and so forth. A document generator pulls the required information from ERP, PLM, and other systems, along with information collected in workflow forms, and uses that to create the cover letter and components automatically. These can be automatically sent to the vendors after approval by the commodity manager or purchasing agent. 

Automating 3-Way Matching

A large manufacturer of household and hospitality products uses a workflow platform for invoice verification. Previously, accounts receivable personnel had to manually retrieve the invoice, then find and compare it against the purchase order and goods receipt to do the 3-way match before approving payment of the invoice. Now a workflow platform automatically pulls all that information from their SAP system, saving considerable time for the AR professional. In the future, they may write some rules to compare and automatically approve invoices within a threshold.

In Part Four of the series, we will examine examples of digital supply chain processes in quality management and product information management.

 

Bill McBeath

Bill McBeath leads ChainLink's research efforts, as well as the procurement, strategic sourcing, design collaboration, and online marketplaces practices. With more than 20 years of experience in a variety of roles as a business and technology researcher and consultant, high tech executive, and software architect, Bill is recognized as a leading expert in extended-enterprise business models. Learn more about his research at http://www.chainlinkresearch.com.