Supply chains have emerged as a prominent topic of global discourse over the past year. Typically limited to discussions within procurement teams, a series of unforeseen circumstances such as labor shortages, new regulations, and transportation delays have thrown supply chain disruptions into the limelight. The current state of the global supply chain is the most unstable it has been since World War II, and, likely, we have only scratched the surface of the challenges we will face.
According to Accenture’s State of Supply Chain report, COVID-19 has led to supply chain disruptions for 94% of Fortune 1000 companies. Unfortunately, the pressure to adapt the procurement process has significantly burdened procurement teams. These teams must navigate the same disruptions affecting other departments, making their task even more challenging.
Modern organizations are adopting strategies to enhance supply chain resilience by cultivating agile and diverse relationships with suppliers, labor, and customers. However, given the novel landscape, we find ourselves in, numerous questions remain unanswered. What measures are organizations taking to achieve their goals? How can technology aid in this endeavor? What steps should be taken next?
To facilitate the analysis of this article, we will break it down into three parts: the past, the present, and the future. We will examine current demands on the supply chain, how procurement teams are currently responding, and the steps they can take to establish a more resilient supply chain moving forward.
The past: Supply chain disruptions and the necessity for adaptable procurement partnerships
In late 2020, amidst the backdrop of pandemic-induced interruptions and obstacles, businesses needed to continue their operations. Procurement professionals scrambled to assess various nodes in their supply chains and identify solutions for any weak links. In response to these new challenges, 40% of companies have reported adjusting their sourcing partnerships. This entails seeking out potential new suppliers, evaluating their offerings, negotiating deals, and onboarding these new vendors.
A major challenge for teams seeking to replace vulnerable elements in their supply chain is that the same external red tape that hampers operations also creates internal friction during the onboarding process for new vendors. Replacing a supplier is not a task that can be accomplished overnight. It typically involves a series of back-and-forth negotiations to establish contract terms, as well as multiple levels of approval thereafter. Even once all terms are agreed upon, putting them into action takes time. If this process cannot be expedited, relationships may be jeopardized or lost before they can even begin.
Organizations worldwide have realized that their supply chains possess too many potential points of failure. As a remedy, they needed to take action to ensure business continuity. Most organizations had to adapt to improve the flexibility of their procurement workflows swiftly.
The present: The Role of E-signatures in digital procurement
One of the simplest ways organizations stabilized their supply chains today was by adopting electronic signature technology. In terms of internal operations, e-signatures enable individuals involved in agreements to remotely read contracts, negotiate terms, provide approvals, collaborate with others, and store completed documents. Essentially, they can complete any contracting task from anywhere in a matter of minutes. The speed offered by this solution proved critical in stabilizing business operations.
Concerning vendor contracts, electronic signatures help procurement professionals to operate at an accelerated pace. They can route contracts and supporting documentation to anyone and receive acknowledgment of those documents within a day. Through electronic signature technology, new agreements can be signed within days rather than months. When these time savings are multiplied across the various levels of approval required in complex supply chains, the impact is significant. Digital-first systems not only address existing weaknesses in the supply chain but also enhance its resilience against future disruptions.
Managing signatures digitally reduces the time required to complete contracts from months to mere days. Furthermore, it expedites the evolution of team-level processes that procurement teams need to undergo. The influence of e-signatures is felt across all departments, and procurement officers are already finding ways to sustain the momentum of digitization.
The future: Maximizing the benefits of digitization through a comprehensive agreement toolkit
E-signatures represented the initial step for many organizations seeking immediate solutions to their problems. However, the time has come to transition from reactive measures to proactive transformations. By taking a broader perspective and applying the same rationale that facilitated the digitization of the signature process to the entire agreement workflow, organizations can eliminate paper-based processes and manual labor, thereby enhancing speed and resilience. If the efficacy of signatures can be improved by eliminating paper documents and human handling, the same principle can be applied to the generating, routing, and storage of agreements.
By integrating contract technology with enterprise resource planning (ERP) tools, procurement platforms, and human resources (HR) systems, organizations can improve speed, accuracy, and security at every stage of the supply chain document process. This culminates in a highly resilient system capable of seamlessly adapting to any disruption.
According to McKinsey, 66% of organizations that adopted e-signature technology in the past year plan to expand its usage within the next two years. By extending digital transformation beyond signatures, teams can establish an exceptionally flexible supply chain that can quickly engage with new suppliers and onboard them in record time. A digitally connected agreement system reduces potential points of failure, enabling teams to procure goods and services faster than ever before.
A fully integrated agreement system offers more than just enhanced internal efficiency and execution speed. It also paves the way for future technological advancements to introduce AI benefits throughout the process. In the short term, this means streamlining the process through text extraction, risk scorecards, and population management. In the long term, the possibilities for utilizing AI to enhance efficiency throughout the supply chain are virtually limitless.
Flowmono understands that a comprehensively connected system of agreement not only attracts a wider range of external partners but also helps foster a more resilient base of vendors. By streamlining processes, procurement teams can garner increased interest from innovative suppliers seeking to establish relationships with them. Get started on Flowmono today.