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Why digitisation of supply chain is need of hour

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Digital transformation, along with adoption of superior technology, requires organizational changes – intersecting technology, business and people, and countless possibilities of other business avenues.

By Sumit Gupta

Supply chain management entails integrated planning and executing a product’s flow, from raw materials acquisition, production, inventory management to distribution to the final customer, while optimizing flow of information and financial capital. It has come a long way from the time when all the transactions and record keeping was done manually.

Since then it has seen a series of trends from the introduction of mechanization to computerized inventory and record keeping. Computerization paved a way towards innovation in the different aspects of the supply chain like buying, inventory management, logistic planning, warehouse management, etc.

To avoid disruption and provide the customers with the product/service of their choice and at their convenience, digital transformation is becoming the need of the hour. In the journey of digital transformation, companies have to adapt several creative solutions to meet the consumer expectations.

Online players like Amazon are providing same day delivery to stay at the top amongst the competition. To achieve this it requires prior planning and superior supply chain management to adhere to the timelines.

With the growth in the e-commerce sector, the on-demand warehousing model is also gaining limelight.

In sectors like consumer electronics, software and other tech products, the product lifecycles are shrinking. This deterioration of product lifecycles is resulting in the need of a proactive forecasting and planning using prescriptive and predictive analytics for supply chain management.

In order to reduce financial risk, companies are giving way to outsourcing their manufacturing services. However, new supply chain risk is introduced in the form of complexities. Companies that outsource must develop better visibility and supply chain tools and processes while selecting outsource partners that can manage the additional risk.

Digital transformation, along with adoption of superior technology, requires organizational changes – intersecting technology, business and people, and countless possibilities of other business avenues.

One such aspect for efficient supply chain is the availability of fund that help the companies de-risk their business and maintain a better cash-flow. Supply chain finance enables the companies to maintain working capital support throughout its value chain, without affecting the business growth.

In the recent times, companies and their channel partners are showing interest in the digitized avatar of channel finance. They have often expressed their comfort about dealing with ERP integrated channel finance platform that not only provides ease of doing business but is also secure and requires lesser documentation.

With the channel finance getting digitized, companies can now automate transactions, track invoice approval and settlement process from credit disbursal till the payment on due date. Additionally, the data generated through the technology platforms can be analyzed for proactive forecasting and business planning.

To optimize the effect of technology for a digital transformation, the internal and external stakeholders along with business continuity must be at the centre of every investment in technology. As a matter of fact, companies, and even their channel partners, prefer having access to the automated do-it-yourself platforms on their hand-held devices for ready-to-consume information about limit sanctions and outstanding, on-the-go transaction facilities, quicker approvals, etc.

To consider the channel finance ecosystem, the financers – Banks, NBFCs or Fintechs, are also finding this as an attractive proposition to tap into the unutilized credit lines of the larger companies and extend the funding to the SME segment. With digitization in place, along with encouraging policies by Government and RBI, financers are gaining confidence in lending to the SME segment, and hence increases the stability of the entire supply chain.

It is pertinent that companies understand that digitization does not just mean adapting to new digital technologies in the market but also to align the existing business functions and organization goals with these digital initiatives. This will help tap the potential of the existing resources with an improved performance of the organization.

The author is Senior Group President and Head, Medium Enterprise Banking and Emerging Corporate Banking, Yes Bank.


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