Last year, I attended a thought-provoking supply chain conference hosted by an industry analyst organization. The agenda was packed with interesting supply chain topics – cost-to-serve strategies, supply network optimization, S&OP integration, demand shaping tactics, etc. However, the event gave almost no attention to the foundation upon which advanced supply chain planning and execution strategies rest: supply chain integration.
Puzzling. Automated processing of supply chain transactions based on electronic data interchange standards and technologies makes it possible for even small and mid-sized businesses to process thousands of orders each day, accurately, at low cost, and with complete auditability. Without such automation, many companies, especially those with close-to-cost business models, would be unable to operate profitably. Yet supply chain integration is something we take for granted.
Understanding the Value of Automation
According to a 2014 Supply Chain Insights benchmark study of businesses with annual revenues of $250m or more, the majority of order-to-cash and procure-to-pay processes are not fully automated. Only “34% of [sales] orders are moving through the systems hands-free” (p. 7), and “36% of purchase orders are handled through EDI [electronic data interchange] without manual intervention” (p. 8). Another 39% of sales orders and 34% of purchase orders were found to be partially automated, still requiring some manual processing steps. Continue reading