Have a look at Celtrino MD Ken Halpin’s latest interview in Public Sector Magazine. Ken discusses the importance of the e-Invoicing [PEPPOL] pilot project, trends in the Irish market and the company’s future plans.
Last week, I promised to share with you the synthesis of my take-aways from this discussion. What strikes me is that supply chain management of which procurement is a vital component is practiced with enthusiasm and skill by professionals all over the world. And, it is not just the multinational corporations that strive to optimise customer satisfaction in a net value manner. Every company, irrespective of size, global footprint and industry, pays particular attention to its supply chain. Successful companies recognize the key competitive importance of supply chain management.
Regardless of how “good” a business may be, ultimately its fate rests on a solid cash flow. In order to continue trading, every company needs money to come in so that they can purchase raw materials, which can be processed and converted into saleable goods and in turn create more cash.
As harsh economic conditions continue to bite, businesses are delaying payment to their suppliers to moderate their own cash flow, but in doing so jeopardise the viability of the other members of their supply chain. So how does a business encourage its customers to pay on time, or better yet, early?
Leading computer and smartphone manufacturer Apple has topped Gartner’s global supply chain ranking table for the fifth consecutive year. The report accompanying the release of the rankings was impressive – a 20.2% return on assets coupled with a 51.5% growth in revenue on the previous year gave Apple an unassailable lead.
A new report from the Carbon Disclosure Project (CDP) in conjunction with Accenture has called on multinational companies to further reduce their emissions throughout their entire supply chain. The CDP analysed 49 global companies and 1800 of their suppliers to ascertain just how well they were doing in meeting their emissions reduction targets.
The survey included household names like L’Oréal, Philips and Walmart and found that 43% of them had managed to make annual reductions in their own emissions. Somewhat less impressive was the 28% of their suppliers having achieved any kind of year-on-year reduction.
A recent change in California law now requires all businesses trading within the state with revenues in excess of $100 million to make their supply chain transparent, for easier verification that they are also complying with anti-human trafficking legislation. Businesses with lower turnovers are also required to make information about their staffing compliance to their customers who do breach the $100 million mark.
Known as the Transparency in Supply Chains Act, this new law is designed to reduce the use of illegal immigrants and slave labour within California and to help businesses identify points in their own supply chains where there may be an issue. As a result, companies are considering how to capture and store this information effectively.
To stay compliant, many companies have begun recording vendor reputation, employee hours and human-resources records in the supply chain management systems, and then making the information available to their supply chain partners. By sharing the information sensitively, businesses up and down the supply chain can see that their partners are not only compliant, but can prove it to the relevant authorities when necessary.
As Boeing found with their supplier portal, sharing information with suppliers and customers within the supply chain, significant efficiencies could be created beyond simply proving legislative compliance. The Transparency in Supply Chains Act has only been in force since January 1st and supporting systems and business processes are still maturing but eventually Californian companies will begin to recognise other benefits available through a more collaborative supply chain.
Information and resource sharing often helps to create a more efficient supply chain, but the politics and costs involved lead many such projects to fail before they even start. By forcing this change on companies, California’s new law will kick-start the collaborative process, which may well lead to further cooperation between affected companies, changing their future prospects.
Once the business case has been made for the introduction of processes and relevant systems have been identified for automation, the final stage is to implement the processes themselves. Whether the processes are for a small business, or a multinational corporation, the post implementation guidelines remain roughly the same:
- Let the process grow and adapt. Process outlines which remain too rigid cannot scale as business needs change. By all means formalise the process, but allow the opportunity for future organic change and enhancements.
- Involve others in process creation and implementation creating a shared ownership and common vision for improvement. Doing this will also overcome many of the political barriers which could otherwise prevent process realisation.
- Maintain a culture of continual improvement. There is always room for the creation of new processes or the refinement of existing ones. Incremental changes will keep processes relevant to business needs and prevent them from becoming a hindrance in future.
Any process, internal or external, can help a business increase its levels of efficiency, but attempting a one-time, big-bang implementation is unlikely to have the permanent benefits desired. Processes need to be frequently revisited to allow for the identification of smaller improvements which will keep the process relevant. Changes in business model, customer demands or supplier will all necessitate changes to business processes – inflexible and infrequent analysis of processes will preclude this.
The responsibility for implementation of processes generally lies with management, but ultimately, all staff should be encouraged to participate in a continual process improvement.
Processes can exist as part of a supply chain management system, or as an internal operating procedure. The scope is virtually limitless. Clearly, where computerised automation is required, a suitable platform will need to be sourced which provides the necessary framework in addition to flexibility for future refinements. Why not give Celtrino a call to discuss the Smart Admin platform and how it could help with your business process implementation projects?