Intelligent Document Processing in Supply Chain Management

By Lee Coulter

Depending on the kind of company you work for, your business either has a “physical” (aka direct) supply chain, or not. All businesses have a “services” (aka indirect) supply chain.

From a supply chain perspective, there is a huge difference if your business entails dealing with physical goods. Supply chain is one of those functions in a business that is kind of a mystery - only the people that work there know how complicated and often fragile it is.

Supply Chain Cost and Document Overload

In 99% of companies, the top two expense categories are people and supply-chain cost. In a services business, people cost is number one. In a business that includes some physical goods, the direct supply chain can sometimes exceed people cost.

Regardless, the amount of money running through your supply chain is significant. Indirect costs for most companies range from 15 to 27% of revenues with an average around 20%. One in five dollars your company brings in goes out through indirect spending and depending on your industry, direct could be another 20 to 30% or more of revenue.

In all cases, there is a lot of money moving through what is generally a very difficult to control set of processes that are riddled with documents.

Lots and lots of documents.

To name a few: contracts, pricing schedules, bills of lading, purchase requisitions, credit memos, return to inventory notices, short ship notices, receiving forms, customs documents, returns, shipping damage/loss notices, sales and use tax documents, purchase orders, purchase order acknowledgements, stock count sheets, prices changes, out of stocks, shipping notices, credit holds, checks, ACH notices, receivables reconciliation requests, backorder notices, substitution notices, and on and on it goes.

Supply Chain Document Management and Control

In a large enterprise, you may have twenty to fifty thousand suppliers. Typically, a company will connect electronically using an Electronic Data Interface (or EDI) to only the largest suppliers.

The rest? Well, they send documents. So many documents.

And they come in to the enterprise through a myriad of ways: vendor portal, hand-to-hand delivery, physical mail (to every and any address a supplier can possibly find), emails to employees, emails possibly to shipping or payables (occasionally suppliers follow directions), as attachments, through the fax server (yes, FAXing is very much still alive in supply chain), as images, as computer forms, and so on.

Also sometimes called Source-to-Pay (StP) or Procure-to-Pay (PtP), this is a part of the business that deals with what I call high-friction, document-heavy processes. Because of the magnitude of money moving through the supply chain, it is also a place of intense control scrutiny to ensure money is not diverted by human actions; intentionally or unintentionally.

The inevitable consequence of controls being added to processes is that they become even more complex and sometime create more documents.

Transform Supply Chain with Intelligent Document Processing

One of the biggest opportunities any company has is to improve supply chain performance.

The day has finally arrived… Automation, and specifically Intelligent Document Processing, has the potential to completely transform supply chain. In the last few years, the technologies needed to dramatically transform supply chain have become ready for prime-time and to operate at enterprise scale.

There are many benefits of an Intelligent Document Processing transformation:

  • Efficiency. Reducing the total cost of managing supply chain processes
  • Control. Eliminating fraud risk and error
  • Speed. Responsiveness to the business and the supplier
  • Working capital. Ensuring payment on the last day of payment term, and avoiding late fees
  • Price leakage. Ensuring payment is consistent with contracted price/discount/etc. terms

Price leakage and working capital are the two largest benefit “pools” for sure, but Intelligent Document Processing delivers improvements across most benefit categories with each process transformed.

The COVID crisis has impacted most all businesses. Some are experiencing massive growth as work patterns change.

Some are needing dramatic cost-control measures to weather the storm. And some are surviving and will rebound strongly as the economies of the world open back up. Regardless of your company’s situation, now is the time to take a fresh look at supply chain and get started with an Intelligent Document Processing led transformation.

It can help to scale growth, take cost out, or get you ready for a strong start on your recovery in an uncertain labor market.

Tags: Lee Coulter, Intelligent Automation, Blog Posts, Intelligent Document Processing

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