Data and digitization are driving new approaches to procurement. By Lynn Torrel
It was quite the introduction to a new job, arriving into the role of Chief Procurement and Supply Chain Officer at Flex and managing the effects of the global Covid-19 pandemic not long after. But what it did do was emphasize the importance of digitization. Flex started its investments and development in this area in 2015, and those efforts proved to be a critical factor in successfully managing our supply chain through the pandemic.
The pandemic has cast a bright light on the importance of digitization, and many companies are now trying to take the fast lane towards digitization and planning for better, more resilient supply chains to protect against risk, build product resilience and build a picture of the future through thorough forecasting. This starts with more comprehensive information, collaboration with all stakeholders, and more intelligent processes to serve global customers.
To make this work, we need data, and lots of it. But we also need supply chain professionals who can interpret the data to and act on it. At Flex, our ecosystem is built on both homegrown and third-party tools designed to help us manage all the key nodes in our supply network. A vital tool is Flex Pulse, our digital supply chain ecosystem tool. It is the eyes and ears of our supply network, providing visibility to help us manage risks and gain efficiency.
When our system flags an issue, it triggers corresponding actions for resolution. If there’s a customer change order, for instance, we quickly filter the impacted purchase orders, assign an owner and a tailored workflow will be followed for resolution.
An important capability of businesses is spotting potential risks, ranging from parts shortage to logistical bottlenecks before they become serious problems. In virtualizing your business processes from parts qualification to tracking shipments, you’re ultimately able to drill down to a part number by customer with just a few clicks. You’ll know exactly where you stand with all parts of the supply chain with both current and future products.
Carrying out a successful transformation
The advantages of digitization are clear to see but outside of the correct context, a business will never be able to optimize their processes in the most efficient way. They also need to know what success looks like so that they know whether they are making the most of their investment. Here are some of the things that businesses need to bear in mind.
Start with strategy – A sound integration strategy is the glue that holds all of the tools together as a cohesive unit and stops them getting in the way of each other. Success here is when you can fold all your tools into one platform to provide an end-to-end view of the value chain.
Know your objectives and stick to them – There are a host of tools available – so much so that they might become a distraction if you aren’t putting your objectives front and center. A clear intent is important. Once you have that, only investigate and invest in the tools that will help you to reach that goal.
Third party tools are a must – If you want that big picture visibility that will help you orchestrate the entire value chain, you’ll want to allocate budget to third-party tools and data sources. That said, even if you have visibility into tier-one suppliers only, it is a great starting point since it will take a certain level of investment to gain visibility into tier two and beyond.
Find potential transformation synergies throughout the business – Digital transformation within the supply chain will benefit the business. But what about efforts to digitize operations elsewhere within the organization? It’s important to be aware of any broader digital agenda and be open to contributing to it, coordinating with other teams and finding opportunities to piggyback on earmarked investments.
Find insights among the noise – We feed our systems with huge amounts of structured and unstructured data. However, getting to the point where the output is actionable information isn’t easy. Large amounts of data can quickly move from becoming a blessing to a curse if we can’t make sense of what it’s telling us. Organizations need to be able to filter out the noise and surface the intelligence that will be of use to the business and the wider supply chain. Connecting the dots in a noisy environment takes effort, so don’t expect intelligence to land on your lap.
These are exciting times to be reimagining our supply chains. Our industry is well-positioned to take advantage of maturing technologies such as analytics, cloud computing, and data storage to leverage data and improve visibility, collaboration and agility.
This isn’t a case of finding cool new toys to play with, it’s about investing into the future of the industry in a way that makes it more reliable and able to cope with rapid change and sudden shifts in the marketplace. Digitization requires substantial investments in time, effort and funding. It’s a long and tough effort, but the rewards are worth it. The best place to start is with defining your strategic goals, looking at the potential areas of improvement and visualizing the potential value that can be generated by becoming more efficient and resilient in managing your processes.
Lynn Torrel is Chief Procurement and Supply Chain Officer, Flex. Flex is the manufacturing partner of choice that helps a diverse customer base design and build products that improve the world. Through the collective strength of a global workforce across 30 countries and responsible, sustainable operations, Flex delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets.