What does “Procurement Visibility” actually buy me?
For any procurement professional who has spent hours matching a purchase order with multiple changes against a scribbled receipt from the loading dock and a faxed invoice, the value of a single record of the truth is obvious. While the impact on the rest of an organization is sometimes harder to explain, it is no less serious.
Let’s consider purchase order changes in the context of capital projects, where a company is spending its shareholders money to achieve results. This could be:
- A marketing department creating an ad for a local television station
- A construction company investing in equipment on a build site
- A shipper working with harbour vendors who provide unloading services
These scenarios share a need to hire & pay vendors. The key document describing the transaction is the purchase order which describes “the what”, “the where”, “the when” and, for goods, “the how many” or for services, “the who” (i.e. junior resource, senior resource, etc.).
The scenarios also all share a commonality in that plans change. A key set piece for the ad is now needed 3 days earlier, or in green, or in London. The crane now needs lights for night work and must be delivered to a garage for logo painting rather than the job site. The ship is coming in early but is missing a container requiring fewer dock workers but sooner.
The buyer needs to find, change, and resend the purchase order. The seller needs to update the order and the costs to which the buyer must agree and confirm the order. Any delay in that chain means that the ad will be delayed or less impactful, the crane can’t be used at night, and no one is standing there when your ship literally comes in.
In a day and age when you can track a pair of shoes being shipped to your home and answer the doorbell from your office, it is unfathomable that multi-million-dollar mistakes can be made because someone misplaced a piece of paper. Having a single version of the purchase order shared by buyer and seller means you get what you need when you need it. Having updates sent directly to a vendor’s mobile phone just makes it that much faster.
Supply Chain Visibility – how individuals can plan ahead thanks to that?
Empowering your employees with knowledge about when ordered goods will arrive can do wonders for organizations.
Having an ability to see in an ERP if a supplier confirms an order alongside the exact date when he is planning to ship it allows the goods requester to plan ahead.
Let`s consider a chemical company performing experiments in a laboratory.
To conduct an experiment, more often than not a researcher needs a very specific safety material. Of course a laboratory is also required to proceed with the experiment in a safe manner.
However, the number of such laboratories is quite limited in a plant (just like meeting rooms in some offices – you need to book them ahead of time).
So without knowing when the material will arrive to the researcher, the laboratory cannot be reserved ahead of time. Only after safety material is received can the researcher try to schedule an experiment which wastes several days waiting to get into the lab!
The entire timeline to finish the experiment gets extended because the scientist needs to wait days to get a free slot in a laboratory!
All of that happens because there is no knowledge of when the safety material will arrive. This is just one of the examples where the lack of visibility into the supply chain can delay daily activities within a company.
Having a platform where the supplier can state if the order can be processed and when it can be done is a great first step to address the problem. Having such a platform integrated with an ERP system and having all the information passed on to users can provide unexpected value at times.
Supply Chain Visibility – get more data to strategically evaluate your vendor
Owning a Supplier Portal allows an organization to collect, store and analyse all the data exchanged with supply chain. Having more data points available for reporting allows one to perform supplier evaluations in a more comprehensive manner.
What can be collected? Pieces of information such as:
- How often vendors have recently confirmed or rejected Orders?
- How much time vendors need between receiving the order and the actual shipment?
- How often a vendor faces stock shortages causing him to not fulfil orders on time?
The three examples above are opening another dimension of data that normally is out of reach for an organization that is sending their Orders by fax or making purchases by simply calling suppliers up.
Below is a sample of a report that can be extracted from an ERP system extended with a Supplier Portal platform where vendors confirm or reject orders:
Analysis shows that:
- As the quarter progresses, supplier Startech reports that more and more time is needed to deliver the ordered goods.
- Because vendor estimates number of days at the point of confirming the order, analysis provides insights before the occurrence of the problem.
- Having such a simple report, organization can act and address the alarming trend ahead of time.
Having the ability to spot-check the situation above allows the organization to be more agile and mitigates shortages in supply chain upfront. All of that comes from intelligence that is gained by having suppliers on a portal connected to your ERP.
Unload the burden of Accounts Payable – online invoice status
Suppliers who are short on cashflow would like to be certain if and when their invoice will be paid.
How can a vendor after sending a hard copy invoice or a pdf invoice follow-up on the status of the expected payment?
Seeking certainty, suppliers call their customer’s accounts payable department and/or they send emails to follow-up. Such an offline process is neither efficient nor pleasant for both sides.
Moreover, on a paying side: replying and handling these inquiries takes time. Time that can be used on something more important in the life of an Accounts Payable clerk.
If supplier has a ‘go-to’ place to see all the invoices at once and corresponding scheduled payment dates – he has no reasons to worry, vendor knows the status of every transaction and is not chasing down anyone to find out about payment details.
Where to find more information?
To see SAP`s Supplier Portal in action, check out this video.
If you would like to learn more, I invite you to explore the community – click here.
If you have a question, feel free to send it to our community – right here,