Connected Agreements Make a More Resilient Supply Chain
In the last year, supply chains have become the focus of a global conversation. Normally a topic constrained to procurement team meetings, a series of unexpected events (labor shortages, new regulations, transportation delays, etc.) has pushed supply chain disruption into the spotlight. The current global supply chain is the least stable since World War II and we might only be seeing the tip of the iceberg.
According to Accenture’s State of Supply Chain report, 94% of Fortune 1000 companies are seeing supply chain disruption due to COVID-19. Unfortunately, all the stress on evolving the purchasing process has added quite a heavy burden on procurement teams. It can be hard to handle, since procurement teams are often navigating the same workflow disruptions as every other team.
According to the experts at SME, modern organizations have adopted strategies to increase their supply chain resilience by developing an agile, diverse base of relationships with suppliers, labor and customers. But the landscape is totally new and there are still a lot of questions: What steps are they taking to achieve those goals? How can technology help? What’s working? What’s the next step?
To discuss the issue, let’s break it down into three parts: the past, the present and the future. We’ll look at the recent supply chain demands, how procurement teams are reacting now and what steps they can take to create a more resilient supply chain moving forward.
Supply chain lapses and the need for more flexible procurement partnerships
Against the backdrop of all the pandemic-related stoppages and hangups, businesses still needed to operate. Procurement professionals scrambled to examine various points in their supply chain and find solutions to any broken connections. In response to the new challenges, 40% of companies report that they have adjusted sourcing partnerships, which means they need to find new potential suppliers, vet their offerings, negotiate a deal and onboard new vendors.
A big problem for teams looking to replace weak links in their supply chain is that the same external red tape that slows down operations creates internal friction onboarding new vendors. Replacing a supplier means finding a new one, a process that does not happen overnight. It usually requires a series of back-and-forth exchanges to negotiate contract terms as well as several levels of approvals once after that. Once everything is agreed to, there’s still the matter of putting all the terms into action. If that can’t happen quickly, the relationship could be damaged or even lost before it even starts.
Organizations around the world were forced into a realization that their supply chains contained far too many potential points of failure. As a remedy, they needed to take action to maintain continuity. In order to do that, most organizations needed to make fast changes to improve flexibility in procurement workflows.
E-signature is a common starting place for digital procurement
One of the simplest ways that organizations stabilized supply chain hiccups was adoption of electronic signature technology. As far as internal operations are concerned, e-signature allows anyone who works with agreements to remotely read contracts, negotiate terms, provide approvals, route to collaborators and store finished documents. Essentially, they can complete any contracting task from any location in just minutes. The speed that this solution offered was critical to business stabilization efforts.
As far as vendor contracts are concerned, electronic signature gives procurement professionals the power to operate at new speeds. They can route contracts and ancillary documentation to anyone and collect acknowledgement of that document in less than one day. With electronic signature, new agreements could be signed in days rather than months. When those gains are multiplied across the various levels of approval involved in a complex supply chain, the time savings are incredible. Not only do these digital-first systems fix broken points in the supply chain, they also make them more resilient to breakdowns in the future.
Managing signatures digitally reduces contract completion time from months to just days. More importantly, it speeds up the team-level evolutions that procurement teams needed to make. The fast ROI of electronic signature has been felt across every team, but procurement leaders need to find ways to maintain the momentum to increase their digitization.
Expand digitization benefits with a well-connected agreement toolkit
E-signature was the first step of a lot of organizations looking for quick fixes to immediate problems, but it’s time to shift from reactive solutions to proactive transformations. Zoom out and apply the same logic that resulted in digitizing the signature step to the entire agreement process: removing paper and manual labor from the workflow improves speed and resilience. If signatures have been improved by removing paper documents and human handling, then the same can be true of generation, routing and storage.
By integrating contracting technology with ERP tools, procurement platforms and HR systems, an organization can improve speed, accuracy and security at every step of supply chain documents. All of that adds up to a much more resilient system with incredible flexibility to handle any disruption with ease.
DocuSign research finds that 66% of organizations that adopted eSignature in the past year have plans to expand usage in the next two years. By pushing the digital transformation deeper than just signature, teams can create an extremely flexible supply chain, capable of agreeing with new suppliers and onboarding them in record time. A digitally connected system of agreement will have fewer potential breaking points, allowing teams to procure goods and services faster than ever.
A well-connected, centrally planned system of agreement does more than just accelerate current supply chain workflows. It also opens the door for future technology evolutions to add AI benefits throughout the process. In the short term, that means potential to streamline the process with text extraction, risk scorecards and population management. In the long term, there’s almost unlimited potential for uses of AI to increase efficiency throughout the supply chain.
A fully integrated system of agreement does more than just improve internal efficiency and speed of execution, it also helps attract a wider range of external partners. For any procurement team trying to build a more resilient base of vendors, streamlining processes is a great way to attract more interest from other innovative suppliers.
If you’re interested in learning more about how cutting-edge tools can speed up workflows via a deeply connected agreement platform, check out our How Contract Analytics Help Supply Chain Continuity During Disruptions webinar.