Digital Supply Chains: Part Three – Delivery Management, Contract Management, Procure-to-Pay

Abstract

A fully digital supply chain extends to delivery to the home or business. It also encompasses contract management and procure-to-pay. We look at examples in these areas.

Article

( This article is excerpted from the complimentary report:
Getting Real with Workflow-Enabled Digital Supply Chains
, available for download here. )

Part Two of this series explored real-world examples of digitization of the supply chain in the areas of supplier management, field service, and MRO (Maintenance, Repair, and Operations). Here in part three we continue with examples in delivery management, contract management, and procure-to-pay processes.

Delivery Management

Sophisticated best-of-breed delivery management systems provide rich functionality, such as truckload mapping, container management, dispatching, scanning into the truck, condition monitoring, and more
(see Figure 1).

While these types of systems may be suitable for companies with a large fleet, for whom delivery is a critical core competency, they are often overkill for the many more companies that have modest-sized fleets or for whom delivery is less central. Those companies can realize much of the value they need by implementing a few targeted workflows, for doing things like scanning items onto the truck during loading, scanning items upon delivery, installation and/or repair instructions sent to the repair person’s mobile device, real-time adjustments (OS&D)1 at the point of delivery, photo capture of any damage, customer signoff at delivery, clean and final invoice upon delivery, and electronic proof of delivery. These can dramatically improve the accuracy of deliveries, reduce disputes, and accelerate invoicing and payment. The advantage of a workflow-driven approach is that you can start small. For example, tremendous value can be realized simply by scanning orders at pickup and dropoff. That alone saves time, increases accuracy, reduces disputes, and accelerates time-to-invoice.

Source: Image by ChainLink Research
Figure 1 – Example Delivery-management System Functionality

Supply Chain Risk Management

Managing supply chain risk has become increasingly important. This includes things like:

  • Mapping out a company’s physical supply chain — Knowing exactly where each supplier’s factories are located, and which components and materials they produce there for the company.2
  • Disruption response/Business continuity management — The ability to avoid and recover quickly from disruptions to the supply chain, IT, and operations.
  • Supplier risk management — Knowing risks about each supplier, such as financial stability, performance risks, security, employee vetting, legal risks, reputational risks, insurance, and so forth.
  • Compliance management — Ensuring compliance with laws and regulations, standards of conduct, and customer mandates.
  • Supplier performance management — Ensuring that quality and performance goals are met.
  • New product launch risk management — Contingency planning, monitoring of launches, and rapid response as alternate scenarios emerge.

Many of these activities involve continuously collecting a lot of data from many diverse sources, mini-projects involving several parties and steps that must be completed in a timely manner, and the ability to continuously track progress against goals — all things that workflow platforms excel at. Examples of supply chain risk management workflows that can be implemented include:

  • Surveys and data collection — Workflow automates the sending of surveys to collect information from suppliers, employees, and systems, as well as reminders and escalation when the information is not provided within specified timeframes.
  • Compliance — Workflow can initiate and track compliance to processes, ensure training is being completed, and that proper licenses and certifications are collected.
  • Contingency planning and execution — Create, practice, execute, and monitor contingency plans. These might be contingency plans for new product launches, business continuity plans, or types of events.
  • Audits and inspections – utomating audits, inspections, and any other risk check lists.
  • Monitor and respond — Triggering workflows to respond quickly to events as they arise.

Many of these supply chain risk management functions can be integrated into supplier onboarding processes, as well as ongoing supplier management. Workflow provides much more reliable and detailed audit trails, which can be used to thwart supplier and supply chain fraud. Certificates can be automatically stored in a central content repository. Data from all these activities can be used to feed dashboards and various analytics,

Contract Management

Contract management is another area where excellent best-of-breed systems exist. For supply-side contracts,3 the contract management system may be integrated with sourcing and procurement systems so that they can ingest content from the winning bid for an RFQ and place that into a draft contract, pull from clause libraries to create the right contract language, provide redlining and rules-driven approval workflows, store digitally-signed, executed contracts in a central, searchable repository, and drive contract compliance downstream in P2P (procure-to-pay) execution. However, not everyone needs a full-blown contract management system. They may get most of the value they need by automating the contract review and signing process, or by automatically pulling together the right data needed to create the contract.

Automating Contract Approval Routing, Signing, and Updating of Execution Systems

One manufacturer has implemented workflows they created to automate review and approval of contracts, the digital signing of the contract, and automatic archiving of contracts. At the end of this process, the workflow configures their ERP system to accurately reflect their contractual obligations (such as minimum purchase volumes), volume discounts, and other parameters. This ensures that these elements are driven into the execution phase and not forgotten.

Home Builder’s Automatic Generation and Sending of Contracts

A major developer and builder of residential homes and communities works with many different contractors on each construction project. After an agreement has been negotiated and reached for services in a construction project (such as installing the drywall or plumbing), then a legal contract is automatically generated by Nintex Drawloop4 using information drawn from the builder’s ERP system and Salesforce, along with other information entered by their legal team. That is sent to be digitally signed by both parties. Next, they send a ‘contract confirmation’ document, which is also automatically generated. This describes the job, agreed rates for labor and materials, and other details. The system pulls that information from ERP, Salesforce, and procurement systems. The workflow automatically sends these documents and if the supplier hasn’t responded with a certain number of days, a reminder is sent. This system saves a lot of manual effort, makes the contracts and confirmation documents more accurate, and ensures timely execution of contracts.

Procure-to-Pay

Procure-to-pay (P2P) systems automate the process of helping employees find the goods they need, submit and route purchase requisitions for approval, create and send purchase orders (and receive acknowledgement), track order status, receive and match invoices against POs and goods receipts5 (and sometimes against other payment criteria such as inspections), and approve payment.6 Many of these functions can be performed with workflow platforms; for example, requisition routing and/or invoice routing for approval are great fits.

Automating the Creation and Sending of RFx and PO packages

A number of companies are using workflow and automated document generation to create RFQ,7 tendering, and PO packages. These packages typically have repeatable, templated cover letters and components, such as submission instructions, specifications, terms and conditions, selection criteria, and so forth. A document generator pulls the required information from ERP, PLM, and other systems, along with information collected in workflow forms, and uses that to create the cover letter and components automatically. These can be automatically sent to the vendors after approval by the commodity manager or purchasing agent.

Automating 3-Way Matching8

A large manufacturer of household and hospitality products uses a workflow platform for invoice verification. Previously, accounts receivable personnel had to manually retrieve the invoice, then find and compare it against the purchase order and goods receipt to do the 3-way match before approving payment of the invoice. Now a workflow platform automatically pulls all that information from their SAP system, saving considerable time for the AR professional. In the future, they may write some rules to compare and automatically approve invoices within a threshold.

In Part Four of the series, we will examine examples of digital supply chain processes in quality management and product information management.

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1 OS&D = over, short, and damaged. — Return to article text above
2 This enables much quicker assessment of whether or not their supply chain is impacted when events happen around the world, such as natural disasters, explosions, civil unrest, and so forth. — Return to article text above
3 Contract management systems may be supply-side focused (for contracts with suppliers and third-party service providers) or sell-side focused (for contracts with channel partners, dealers, franchisees, and customers), or both supply- and sell-side. — Return to article text above
4 Nintex Drawloop is a document generation system that is integrated with and able to pull data from Salesforce (and other sources) and is integrated into the Nintex Workflow Platform. — Return to article text above
5 Sometimes called a ‘receiving report,’ this is documentation of what goods and services were actually received. For example, suppose a PO was issued for 100 units, and the supplier shipped 100 units, but three were damaged in transit. The goods receipt will record the fact that 97 acceptable units were received. The invoice is considered a match if it is also for 97 units (not 100 units). — Return to article text above
6 The functions described here apply primarily to indirect P2P. If you’re curious, here’s a brief definition of direct vs. indirect procurement. Direct material P2P, services P2P, and T&E (Travel & Expense) include different functionality, but all of them present opportunities for digitization, automation, and improvement using workflow. — Return to article text above
7 RFQ management is part of sourcing, not P2P, but we include it here since sourcing and procurement are closely linked. — Return to article text above
8 Three-way matching is where an accounts payable person or system compares a received invoice against the original PO and the goods receipt. If they match (within prescribed thresholds), then payment is approved. If not, the invoice is rejected, informing the supplier’s accounts receivable department the reason why. This may result in a protracted dispute resolution process. — Return to article text above


To view other articles from this issue of the brief, click here.

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