Being a responsible business isn’t just about your CSR programme or environmental credentials. We believe it is first and foremost about how you work with and treat your suppliers to create an efficient supply chain that is mutually beneficial. In some ways, it is far easier to run a charity initiative or education programme than to day in, day out, operate with your suppliers in a considerate and transparent way.
We are passionate about championing the importance of a healthy and frictionless supply chain where buyers and suppliers work in collaboration to achieve their goals. Our network aims to bring buyers and suppliers closer together with unique technology that revolutionises invoice processing, maximises efficiency and improves cash flow management.
So what steps can businesses take to ensure a healthy supply chain for 2018?
Upfront candid conversation
There are many ways in which companies can nurture the health of their supply chain. For example, at the very start of the relationship it is vital that the buyer and supplier discuss payment terms and make sure they understand exactly what has been agreed upon. This will help avoid confrontation down the line through confusion or ambiguity. And buyers need to act in a responsible way and pay on time, realising the impact that late payment can have on smaller suppliers, who all need to actively manage their working capital to grow.
Technology aids transparency and efficiency
Technology can really improve supply chain collaboration. By adopting e-invoicing, the data is much easier to optimise, move, track and analyse than with paper-based processes. Digitisation can improve the entire dynamic between buyers and suppliers as everything is shared and transparent and suppliers become more like partners. E-invoicing improves the efficiency of the process and makes prompt payment easier to achieve as everything is automated.
By allowing a supplier to track an invoice electronically through a portal, they can see in real-time at what stage their invoice is and whether there have been any problems. It gives them immediate visibility of when they are going to get paid, enabling them to monitor cash flow and manage their working capital requirements. This is an easy way in which buyers can behave responsibly towards their suppliers, who will often be smaller businesses, more prone to cash flow problems.
What’s more, having the ability to check invoices online has been proven to reduce inbound calls and emails to account teams by 60 per cent, freeing them up to focus on other business priorities. It also strengthens working relationships as suppliers no longer have to chase or have awkward conversations about the status of an invoice.
Removing friction caused by global trade
Over the last twenty years, the growth in global supply chains has been considerable. While this has brought fresh and lucrative opportunities for many, it has also generated lots of friction. Friction comes from complexity and regulation and we don’t see that diminishing any time soon. In fact, the imperative to regulate and control supply chains is only going to get greater as global trade increases. At Tungsten Network, friction is a problem that we’re trying to solve. In particular, the fact that we’re tax compliant in 48 countries – more than any other trading network in the world – means that companies trading across multiple jurisdictions can be sure of compliancy in each different country, removing the hassle, worry and friction from their supply chain.
PAYMENT CULTURE AND THE RESPONSIBLE SUPPLY CHAIN
Listen to Henning Holter, Guy Miller and David McKenzie, Manager International Front Office Operations, Unisys discuss some of the ways companies can nurture the health of their supply chain.
View the results of our 2017 friction index at www.tungsten-network.com/procure-to-pay-friction/