Nearly every day there are new stories of supply chain disruption hitting the news because of product and material shortages. Chick-fil-A sauce, fireworks, Peloton bikes, and ketchup packets are a few recent examples that come to mind.
As consumers, we are inconvenienced by these disruptions, but as much as we don’t want to go without our Chick-fil-A sauce, the frustration doesn’t compare with the losses being faced by companies and the heartburn being felt by procurement and supply chain professionals.
There is constant change in the manufacturing world today. In fact, our experience working with SourceDay customers has shown us that between customer orders, purchase orders, and demand coming out of MRPs, things are changing at a rate of 50% or more. And while this may initially sound like bad news, it is actually a huge opportunity.
For the first time in a very long time, we see a massive short-term opportunity for companies to turn around their supply chains. They can do this by getting the visibility they need to make critical decisions at any point in the manufacturing process. This visibility creates predictability – not by preventing change, but by automatically keeping all systems and parties informed when circumstances inevitably do change.
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Historically speaking, supply chains have been managed manually. Data is entered into systems by hand, and all changes and updates have to be made in the same way. This makes change slow and cumbersome, despite the fact that updated information has to get out into the supply chain as quickly as possible. For customers that communicate change through emails and spreadsheets, much of their information is outdated and inaccurate by the time suppliers interact with it. And that makes both buy-side and supply-side organizations less efficient.
The real issue for any manufacturing company is its ability to manage change. It doesn’t matter how much they invest in sales or capital equipment. If the company can’t predictably get the materials they need, they can’t serve their customers – and that is very bad for business.
AP automation isn’t new, but it hasn’t been widely adopted in manufacturing because purchase orders and invoices tend to be so complex. Technology has now caught up with these complexities, creating a real opportunity for manufacturers to leverage automation as their response to unavoidable change. And yet, some companies are still hesitant.
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Let’s face it; the status quo is comfortable. People tell us all the time, “This is how we do it. I’m not willing to take any risks to figure out if there’s a better way of doing it.” Change can be daunting; you have to be prepared. When you’re going to move your world into digital and add automation, you need to plan for a certain amount of change management in order to be effective.
The other element that has to be addressed is concern about job security. If a company is automating processes, they are also automating people’s work – or that is what they may be left to believe without a proper communication effort. What companies really want is for people to do more strategic things for the business to drive value and point their resources in a more strategic direction, not to eliminate their jobs.
Manufacturing is one of the most challenging industries to succeed in. The ERP systems that these businesses rely upon are complex for a reason; manufacturing is a complex business. Information must move quickly through the supply chain in order for it to help these organizations overcome everyday challenges – making sure that if they do end up in the headlines, it is for good news, not disruptions.
You can learn more about best practices for digital transformation to meet challenges like supply chain gaps in the webinar ‘The Smart Factory: Exploring Manufacturing Automation Trends’ that we did with our partners, Avalara and Acumatica. Watch the webinar on-demand here.
–Clint McCree COO & Co-Founder, SourceDay