The world’s supply chains have faced manifold challenges since the onset of Covid-19 and they are being stretched further by geopolitical and economic circumstances. Unsurprisingly, 95% of all business leaders say they’ve faced some form of supply chain disruption over the past year.
Simply maintaining the status quo is not possible, and the current challenges are going nowhere. The only option, then, is to look forward and resolve our supply chain issues proactively.
Effective data analysis may not be a panacea, but it can go a long way to helping companies get ahead of their supply chains. The world has more data than ever before (by 2025 we’ll have sent more than 200 zettabytes to the cloud) and Covid-19 has acted as a spur to this trend, driving the adoption of digital tools.
Notably, the world is doing more business online than at any time since the birth of the internet. The global e-commerce market is now nearly four times as big as it was as recently as 2015, while global digital payments are on track to smash the $6 trillion mark by the end of this year.
This huge trove of data gives businesses more information about how their customers are behaving, and, crucially, what their suppliers need to maximise the relationship.
“Due to the shift to online and digital payments during the pandemic, many companies now have access to a huge amount of data about their supply chains,” says Marc Pettican. Used properly, he says this will help them bring their procurement and payment practices up to speed.
Identify problems and source alternatives
With the information that is being created, companies can unlock a wealth of information across both front and back-office.
For example, they can analyse customer profiles to predict future requirements and tailor their attention to specific geographies. Appraisal of wider consumer trends can help them target burgeoning areas of growth, adjusting their own stocks accordingly. And geopolitical information can help them anticipate future supply breakdowns, select the most easily accessible warehouses and reroute stocks to avoid trouble spots.
But the most important area, without doubt, is supplier data. By monitoring their suppliers, companies can identify potential problems and source alternatives when needed.
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Specifically, they can:
- Catalogue their suppliers based on the number and value of transactions processed. This enables them to identify strategic gains.
- Organise suppliers into relevant groups to identify specific improvements at each level.
- Analyse their suppliers’ preferred payment methods to inform choices about which tools and channels should be used at operational level.
- Identify areas where discounts are available through early payment of invoices, to improve the overall bottom line.
Simplicity is the key
Some readers may find all this daunting; the thought of delving into their data troves may dredge up nightmarish images of endless searches and impossible-to-reach files. But the modern breed of digital data solutions gives companies a 360-degree sweep of their entire information vault, and can locate any file in seconds.
Ultimately, simplicity is crucial. When choosing different data solutions, companies must identify platforms that are easy for their people to use and present data in a simple, transparent manner. And the more functions available on the same platform, the better.
As an example, Marc points to Barclaycard’s new platform, Barclaycard Payment Intelligence. This package combines accounts payable information with third-party data, machine learning and proprietary algorithms.
This joined-up approach offers various benefits, as several prominent commentators in the B2B space have noted. At the most basic level, it saves staff the time of jumping from one platform to the next, and avoids the need to provide training on different platforms. But more important is the data integrity.
By pulling all datapoints into one platform, companies can ensure that data isn’t lost in the transition from one software package to the next. And, with all data housed in the same place, these users can turn information into genuine bird’s-eye insights.
Indeed, Marc notes that his company’s own solution has enabled clients to catalogue their suppliers based on the number and value of transactions processed, as well as their size, location and industry, to help identify areas for strategic improvement.
“For companies with thousands of suppliers on their books – big and small – this can offer significant time and cost savings,” Marc continues. “BPI has specifically helped our customers to optimise their supplier relationships, release untapped value from payment chains and, as a result, improve their bottom lines.”
Indeed, this panoramic approach to supply chain data improves companies’ ability to manage wider turbulence and black swan events like Covid-19. With over 90% of CFOs reporting high levels of uncertainty, this ability matters. Big time.
“Companies needed to find new ways of ensuring business continuity,” Marc says, “from sourcing different products and services to adopting new, data-led tools and capabilities.
“Supply chain resilience has never been more important. In fact, our customers are telling us that the pandemic has reshaped their supplier bases in terms of size, complexity and importance to business continuity.
“Against this backdrop, it’s fundamental to understand the intricacies of the companies you are working with. Data is the only way to achieve this.”
And there are benefits for suppliers, too. Effective data management solutions enable companies to understand the vulnerability of supplier groups, so those who are most financially fragile can be supported through the implementation of new and improved payment strategies. In Marc’s view, “this ensures prompt, efficient payment of invoices and strengthens relationships between companies and their suppliers.”
The next normal
With the Omicron outbreak dampening consumer optimism somewhat, the outlook for companies in the UK – and across Europe – continues to change. And there is no doubt that many companies remain behind the curve when it comes to B2B technology; as Marc points out, many parts of the business-to-business payments process are still too cumbersome and need modernising.
However, there is hope. The amount of data we’re producing is increasing exponentially – between 2010 and 2020, the creation, capturing, copying and consumption of digital information increased by around 5,000% – and the post-Covid trends like remote working and online shopping are accelerating this surge still further. Companies have never faced greater turmoil, but they’ve never had more knowledge with which to confront it.
At the same time, we’re witnessing a new wave of progress in technologies such as artificial intelligence and its offshoot, machine learning. On one hand, the tech is getting faster; witness the recent project led by Intel and Microsoft, which increased the speed of AI computations more than five-fold. On the other hand, the conclusions reached by these programmes are getting smarter. Next-gen technologies such as natural language processing are enabling machines to extract highly nuanced interpretations from human text, understanding the subtlety of language to deduce meaning and sentiment. As well as reading what our customers and suppliers have said, machines can now tell us how they’ve said it.
But now, it’s up to the companies themselves. Their willingness to rip up the old rulebook regarding supply chain management, and build a new approach around incisive, insightful and 360-degree data, will determine how many companies fare in the post-pandemic world.