Data processing, 1959. Image by James Vaughan, CC license

If you search “technologies for supply chain evolution” you will get 17.8 million results, many of which will mention IoT, robots, driverless vehicles, mobile technology, predictive analytics, network optimization software, and 3-D printing.

The presumption is that industry will want these solutions because of the coming added complexity and demands of the modern supply chain in the digital age.

But most supply chains still confront very basic problems and inefficiencies; they haven’t in many cases even fully deployed yesterday’s technology, so delivering product with drones doesn’t make the priority list.

So which technologies are key to the supply chain of the future? The same ones that were introduced 15 years ago that companies still haven’t adopted! This is unfortunate, because many of these technologies were designed to automate the supply chain office, and without automating the supply chain office, all of that promising talent you are committed to developing is typing away at tedium.

Just visit your customer service department, where very smart and capable humans – some with $120,000 college degrees — are reading data from pieces of paper and entering them into systems, an act which, according to supply chain technology gurus, should have disappeared years ago with the introduction of EDI, integrated systems, and OCR.

Supply chain managers are managing minutiae, not the supply chain.

Where does the minutiae come from? From the 18,000 to 30,000 phone calls or emails and the 120,000 to 350,000 manual interventions a typical ($2 billion +) company must make just to ensure proper system processing of its order-to-cash flow. And this is with all the normal ERP and associated technologies, such as EDI, that a company of that size normally uses.

Companies still have teams of people shuttling information and data all over the supply chain office, and because they are busy shuttling information they don’t have time to look at it to make sense of it and use it to improve your business.

Automating the supply chain office is one of the cheaper technology moves you could make. The EDI and OCR of the 1980s has gotten better and easier to deploy, and when strung together with complimenting technologies, can automate nearly all of your order processing, exceptions management, invoice discrepancies and customer claims work.

Automation also has the enormous benefit of – by definition – digitizing every piece of data from every transaction. If all of your shipping and invoice claims are scanned, stored, and sent to transactional systems for disposition, all that data is available to study for patterns, relationships, and other insights that can mean immediate savings. Like getting a view of the forest.

Want to evolve? Make the supply chain office run itself. For a $2 billion company selling to major retail outlets in the US, this means zero human intervention for every one of 60,000 deliveries a company of that size is likely to make. Most business rules are simple to automate: if X order received, send to Y location and reply Z back to customer.

A truly evolved supply chain office is one where all human assets are users of data, not movers of data, creators of opportunity based on a view of the forest, and customer relationship builders.

One easy way to improve supply chain efficiency is to automate customer claims processing. In my experience, a company making 75,000 deliveries each year will have to manage about 15,000 – 20,000 claims over that time. And while there could be a million reasons for refusing to pay all or a portion of the invoice – these are often because of damage, unsatisfactory service, faulty products or incorrect pricing.

In a non-automated environment, claims processing works like this:  

• Collect paperwork
• Look up data in systems
• Copy delivery and invoice documents
• Investigate claims that matter
• Assign a status to the claims for future credit (or not) to the customer.

Apart from investigating the root causes, the only value that a human adds here is to make sure that data is where it’s supposed to be.

On the other hand, in an automated environment, all relevant documents are: 

• Scanned
• Analysed
• Sorted
• Filtered through business rules
• Categorised into a database.

All of this happens without human touch. However, once this data is in a database or system, that’s when humans can glean valuable, actionable information, such as which customers have a pattern of making claims for the same reason month after month.

This is when your supply chain team adds the real value – critical thinking, analysis, and creative problem-solving. The result is actually a reduction in the cost of claims.

In a non-automated environment: human added value = processing claims.

In an automated environment: human added value = reducing claims!

In automated environments, it really is possible to redeploy staff to more profitable work, and these roles are bound to be more satisfactory because of the added challenges and greater opportunities for creative thinking. And that can make all the difference in attracting the supply chain leaders of the future (because talent management could actually give your supply chain a competitive edge).

How do you make the shift from non-automated to automated environments?

In 1992, the Harvard Business Review published the influential and now famous article: Staple Yourself to an Order, a piece about how organizations can eliminate inefficiency and bad customer service by following each step an order takes across the supply chain.

This is what you need to do when it comes to order and claims processing…read more

Nearly every discussion about the evolution of the modern supply chain is about technology – big data, the internet of things (IoT), analytic platforms, and the tools used to reach digital channels. But little is said about the supply chain talent shortage.

In fact, in a recent study only 38% of supply chain executives felt confident they had the right skills in their organizations.

Why does the supply chain skills shortage exist?

Theories include:

• A negative perception about supply chain work (young people think it’s not cool)
• The fact that there’s a lack of women in supply chain roles
• The exiting of baby boomers from the workforce.

These seem to ring true. When I’ve attended supply chain conferences and scanned the crowd there, what did I see? Middle-aged men.

I have another theory: most supply chain jobs are boring. Ship stuff in. Ship stuff out. Type data into a computer. Transfer data from one system to another. Scan documents and send them somewhere. Look up stuff in tables. Fix problems in failed transactions. Yawn!

Tedious and repetitive tasks are still the norm

Despite the hype about how technology is revolutionising the supply chain, software and other tools that are used to eliminate the numerous tedious and repetitive jobs have not yet been widely adopted. Why? Because most large enterprises are risk-averse and slow to change (a topic for another blog).

The problem with supply chain processes

Two areas that suffer from energy-sapping tedium are order processing and logistics claims processing. These tasks, problems, and processes are the same day-in and day-out.

But while some companies have hundreds of people processing orders and claims, the irony is that these same companies have adopted technologies such as an ERP system and EDI – but they still need people to shepherd transactions in and out of systems. I know of companies who have used EDI for years and still have a human being checking every single EDI transaction for accuracy! (As an aside, just imagine what would happen to your orders if your customer service representatives disappeared!)

Why is all this important?

Read the rest of the blog here to find out why