Supply chain inefficiencies cost retailers more than $1 trillion in lost sales each year. While digital transformation has been rapidly adopted across marketing, sales, and customer experience, supply chain is one discipline that continues to lag. The average supply chain had a digitization level of 43 percent, according to a 2017 McKinsey report.
The disruptions product companies experienced during the Covid-19 pandemic remind us how critical supply chain is to operating a business effectively. Disconnected and outdated manual processes can't keep up with supply chains that are increasingly global and complex. The McKinsey report above notes that "companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent--the largest increase from digitizing any business area--and annual revenue growth by 2.3 percent."
For small and medium-size businesses (SMBs), digitization numbers are even smaller. According to Deloitte, SMBs account for approximately 45 percent of all U.S. GDP, yet only 23 percent use software to connect sales with supply chain operations. To maximize operational efficiency and consistently deliver on time, on quality, and on cost, businesses must take steps toward modernization.
The biggest risks for brands often occur in the "first mile" of the supply chain where delays, gaps in communication, and supplier effectiveness can greatly influence overall customer experience. The first mile spans a lot of disparate processes, from sourcing and raw material allocation, to transit, delivery, and acceptance of finished goods into a brand's warehouse. One way to get started quickly is to implement a digital SRM solution.
What Is SRM?
Supplier relationship management (SRM) is a set of digital tools that enables you to manage and optimize your supplier partnerships--in the same way that a CRM system allows you to improve relationships with future and potential customers.
SRM is a growing focus for business leaders worldwide. In a global 2019 Deloitte survey, CPOs rated supplier collaboration and restructuring existing supplier relationships in their top five priorities for their organizations in the next 12 months. SRM software, like ours at Anvyl, combines real-time data with automation, collaboration, and planning capabilities so you can understand how each individual component affects your overall supply chain.
Here are four ways digitizing your processes with SRM will help your company save time, money, and resources.
1. Improved Collaboration
A digitized supply chain allows internal and external teams to work together more fluidly. If your supply chain lives in emails, individual spreadsheets, and pen-and-paper documents, important information remains siloed and collaboration is cumbersome. When all stakeholders, both internal team members and external partners, can see the same real-time data and interact on one platform, you can make quick, well-informed decisions without running into bottlenecks.
2. Full Visibility
SRM offers transparency into the entire production process, enabling you to check in with suppliers, flag any potential challenges, conduct scenario-based demand planning, and set up a real-time feedback loop. Companies often concentrate on improving the efficiency of the last mile, delivering products to the customer's doorstep, but this first mile is even more crucial. Full visibility into production lets you align all of your teams and solve problems before they start.
3. Predictable Automation
Digital supply chain management simply makes your employees' lives easier. It automates repetitive tasks and eliminates inefficiencies, driving better overall team performance, reducing costs, and boosting employee satisfaction. Instead of one or two people taking responsibility for all of the different spreadsheets, you can centralize supply chain data and give access to everyone who needs it. This will make results more predictable, provide a single source of truth, and give your team valuable time back to focus on higher-value activities to deliver great customer experiences.
4. Scalable, Repeatable Processes
SRM provides a clear, repeatable set of processes that your teams can follow and adjust as you scale. It gives you a comprehensive view of all of the moving parts of your supplier relationships, offering insight into what is working well and what you need to optimize.
Digitizing your company's supply chain can provide competitive advantages today while allowing for greater flexibility as business needs change.