How supply chains can improve efficiency on everything from rebates to operations

August 19, 2022


By: Andrew Butt, co-founder and CEO of Enable

Efficiency has always been vital for supply chains, but the economic volatility suppliers and distributors face today has made streamlined, resilient, and agile processes more important than ever before. At a time when margins are tight, disruptions are relentless, and business relationships are suffering amid all of the above, it’s essential for companies to build efficiency into every component of their supply chains – from data management to collaboration.

It’s difficult for supply chains to remain competitive when they’re hobbled by inefficiencies, such as a lack of transparency, siloed information, slow regulatory compliance, and cumbersome rebate management. These are all obstacles that can be overcome with automation, robust data collection and analysis, and increased communication between departments and teams. This is why supply chain partners need to implement a centralized digital platform which will address all of the above. 

The past two years have demonstrated the massive cost of supply chain inefficiencies – prices have surged around the world, delays and shortages have become commonplace, and economic output has slowed significantly as a result. While greater efficiency has always been critical for supply chain partners to outpace their competitors, it has become a matter of survival for many companies. Suppliers and distributors need to take a hard look at how their processes can be improved to build quicker, more reliable, and more adaptive supply chains. 

Increasing transparency across the supply chain

Efficient supply chain management is all about coordination: departments and teams have to be capable of synthesizing workflows, accessing and sharing relevant data, and collaborating with as little friction as possible. In other words, transparency has become indispensable for suppliers and distributors. EY reports that visibility is the top priority for supply chain leaders over the next three years, while a Kenco survey found that 90 percent of industry professionals regard the implementation of “visibility technology” as a priority or a high priority. 

Companies need to make data and insights available to all key stakeholders, facilitate communication and collaboration, and eliminate silos. This will ensure that they’re better equipped to establish and meet revenue targets, reduce wasteful duplicate operations, and improve the process of negotiating contracts with their partners. They will also be more informed about the risks and advantages of working with particular companies. When PwC asked CFOs how they’re planning to change their supply chain strategies, they ranked understanding the financial and operational health of suppliers at the top of their list. 

Transparency is especially important when relationships between supply chain partners are under stress, costs are rising, and the threat of disruption remains constant. By ensuring that critical information is available across the organization, teams are able to communicate and collaborate effectively, and all stakeholders are aligned on objectives and processes, supply chain partners will dramatically increase their efficiency. 

Digitization and automation are crucial

One of the most pervasive causes of inefficiency in the supply chain sector is the stubborn refusal to abandon cumbersome and error-prone manual processes. Far too many companies use spreadsheets and other outmoded resources to negotiate and manage relationships, track deliveries and payments, and comply with ever-shifting regulations. This can lead to costly mistakes and slowdowns that damage relationships between suppliers and distributors, anger customers, and have a negative impact on productivity.

Companies that automate their processes, on the other hand, are more efficient and responsive than their competitors. In most cases, digitization is a prerequisite for automation, which is why it’s no surprise that 61 percent of supply chain leaders say technology provides a competitive advantage in the sector. According to a 2022 surveyconducted by PwC, 60 percent of business leaders and supply chain officers say the “inability of suppliers to respond to technological challenges” poses a risk to their business. PwC also reports that one of the top purposes of digitization is the use of “automation to improve the speed and accuracy of decision making.” 

Automation increases workflow efficiencies by freeing up staff for higher-value work, drives down costs by eliminating redundancies and streamlining operations, and increases revenue by helping companies meet customers’ needs more quickly than their competitors. Meanwhile, the digital tools that enable automation can give suppliers and distributors a major competitive advantage in many other areas. 

How a centralized digital platform can drive efficiency

Beyond providing the infrastructure for automation and facilitating the flow of information across departments and teams, digitization can help companies negotiate and manage rebates, keep up with the evolving legal and regulatory landscape, and build healthier relationships with their partners. Of all the technologies supply chain leaders are investing in, PwC found that their top digital priority is the establishment of a “cloud-based common data platform.” 

One area where manual processes can cause serious disruptions is the negotiation and management of rebates. A lack of coordination between teams or an accounting error can lead to missed or delayed payments and significant losses in rebate income. Time-consuming methods of negotiation like endless email chains make it more difficult to get deals approved and address disputes when they arise. Companies can get around these problems by using an online platform to track all their trading agreements and maintain a clear audit trail. 

Rebates are particularly important at a time when relationships between supply chain partners are under strain due to high inflation and unpredictable economic conditions, as they provide price stability and incentives for companies to continue doing business together. Digital tools are essential for companies to fully leverage rebates – especially now. 

Companies in the supply chain sector are confronting many of their most daunting challenges in many years. Even without the economic chaos of the past several months, supply chain professionals have to be capable of keeping pace with rapidly shifting global markets and increasingly formidable competitors. Now that companies are dealing with an explosion of costs, supply chain snarls, and many other crises, they have to prioritize efficiency like never before.