A recent McKinsey & Company newsletter article, What digital really means, focused on how to evolve as a digital business. The issue is top of mind for organizations looking to maintain a competitive edge in a dynamic global business environment.
As McKinsey defined it, digital is a way of doing things, and the article cited several key attributes, including creating value in core businesses and building foundational capabilities. It also called out another important consideration: re-examining how you do business.
That’s especially important for organizations looking to leverage their supply chains for business advantage. Connectivity via EDI networks was a first step in that direction, but the cost and complexity limited the reach to a small group of suppliers, and the scope of an initiative to document exchange, not data validation and touchless processing.
In a digital economy, connectivity through business networks changes the game. These networks are the foundation of supply chain innovation that unlocks new business potential and strengthens trading partner relationships.
From a procure-to-pay perspective, here are some benefits of going digital:
• Offer a consumer-grade shopping experience, making it easy for everyone to order off catalogs from preferred suppliers
• Automate matching of invoices to contracts and service entry sheets to further enforce compliance
• Support real-time visibility into, and management of, purchase orders, invoices and related transaction documents, to drive high rates of straight-through processing
• Improve management of off-contract spend through spot buys
• Link payments to all relevant transaction documents, informing suppliers about payment status and simplifying reconciliation
• Manage cash collaboratively through dynamic, sliding scale discounts
• Enable a closed-loop, networked-payables process, where detailed invoice data is captured and analyzed for better control over spend
How do you achieve this level of transformation? From an infrastructure perspective, the best approach is to partner with an organization that combines a business network with an integrated set of source-to-settle solutions. The alternative—selecting niche solutions for different tasks—places the burden on you to tie everything together. That could lead to what McKinsey calls “piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts.”
Executive support, and alignment from stakeholders in procurement, supply chain, and finance are also essential to success. If one group clings to an old process, that can sabotage the initiative. Getting everyone engaged early on in the process ensures that a digital dream can be realized.