Supply Chain - August 2021 by Supply Chain Digital

August 2021 | supplychaindigital.com

Procureto-Pay Providers

FORTINET

DIGITAL SECURITY, EVERYWHERE YOU NEED IT

Rick Peters, CISO, explains why cybersecurity is a continuous journey and how Fortinet can help keep businesses secure in the post-COVID world FEATURING:

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Ninian Wilson

Group Procurement Director & CEO, Technology Procurement Director Vodafone Procurement Co Sarl

Jim Townsend

Chief Procurement Officer Walgreens

Mark Bromley

Director of Sourcing, Supplier Management Mastercard

Chris Shanahan

VP Global Procurement Thermo Fisher Scientific

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The SupplyChain Team EDITOR-IN-CHIEF

RHYS THOMAS EDITORIAL DIRECTOR

SCOTT BIRCH

PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

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FOREWORD

Rocketman Jeff Bezos had an interesting epiphany during his short stint in space with the launch of his private space tourism company Blue Origin.

“We can move all heavy industry and all polluting industry off of Earth and operate it in space” Jeff Bezos, Amazon chair & space tourist

SUPPLYCHAIN DIGITAL MAGAZINE IS PUBLISHED BY

What struck Jeff Bezos as he surmounted the Karman Line, the boundary 100km above sea level widely considered the start of space, was the fragility of our planet’s atmosphere. It’s hardly an earth-shattering observation, but his next comments to CBS reporters were: “We can move all heavy industry and all polluting industry off of Earth and operate it in space.” It’s a fantastical notion – even the bookseller-turnedbillionaire admitted so – but then again, who would’ve expected to see two private space tourism companies launch – in more than one sense of the word – within a two-week timeframe? Back on terra firma, supply chain and procurement executives shrug their shoulders. The sector is already playing arguably the biggest role in reducing carbon emissions from global trade, developing new innovations to combat a sustainability crisis slowly spiralling out of control – think Unilever’s globe-trotting nano factories or Maersk’s pioneering carbon-neutral shipping vessel. But maybe sometime in the not too distant future, supply chain leaders will add space to the land, sea and air networks that keep the world moving.

RHYS THOMAS

Rhys.Thomas@bizclikmedia.com

supplychaindigital.com

CONTENTS

Our Regular Upfront Section: 08 Big Picture 10 The Brief 12 Global News 14 People Moves 16 Timeline: Blockchain Transactions 18 Legend: Frederik W. Smith

Digital security, everywhere you need it

Procurement outsourcing: How to partner with outside experts

Fortinet

Procurement

Supply Chain

Global Trade Management: The big picture to efficiency

Parker Hannifin

Engineering success for a better tomorrow

Logistics

DHL and UPS: How is 3PL evolving in 2021?

Technology

QR technology: The Bridge to a Sustainable Fashion Industry

Top 10

Procure-to-Pay Solutions Providers

BIG PICTURE

August 2021

Space Race

Earth, Milky Way

A view onboard Virgin Galactic’s first space flight. Founder Richard Branson became the first of the billionaire space tourism moguls to leave the shackles of gravity behind. He beat rival Jeff Bezos, who stepped down as CEO of Amazon to focus on his space endeavour Blue Origin, among other things, by just 11 days. Virgin Galactic ©

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THE BRIEF “We want to work with our customers as close as possible to really be able to say the best shipment the customer can get is from Parker Hannifin” Dirk Falkenreck

EMEA Distribution and Value Add Center Manager, Parker Hannifin 

BY THE NUMBERS

Based on 270 respondents on Supply Chain 's Linkedin

Which shortage has been most disruptive to your organisation this year?

52%

Shipping container

“There's all these waste stitches along the supply chain that need to be figured out, and then the recirculation of those raw materials back into the supply chain. None of that's happening with fast fashion” Dirk Falkenreck

EMEA Distribution and Value Add Center Manager, Parker Hannifin  READ MORE

28%

Talent / drivers

16%

Semi-conductor

4% Other

The Focus for ESG

53% of supply chain professionals will prioritise sustainable sourcing in their ESG commitments. The second biggest focus is reducing carbon emissions (19%). Source: Supply Chain Digital LinkedIn Poll

“You need supply chain and procurement professionals in the conversation earlier, and more involved. The traditional system of negotiation between manufacturer and supplier no longer works” Sundar Kamak

Head of Manufacturing Solutions, Ivalua  READ MORE

August 2021

Data’s Growing Role in SCM

61% supply chain leaders say their organisation’s operations are based on data, not prior experience. Wide spread or full-scale data usage has increased by 2.5 times compared with three years ago. 98% of supply chain leaders expect data use at scale within two years. Source: Accenture

How P2P can deliver greater efficienies What is procure-to-pay? The exact definition of procure-to-pay, often shortened to P2P, differs between organisations, but broadly the process integrates purchasing and accounts payable systems. It focuses on three vital steps in the procurement process: requisitioning goods, receiving them, and paying for them. Why should I care about procure-to-pay If you’re a procurement professional, P2P Procure-to-pay brings about greater efficiencies, and by digitising the process can alleviate professionals from time-consuming administrative tasks. Many P2P platforms integrate seamlessly with existing ERP systems and automate everything from negotiations to invoicing. They also offer tools for spend management to gain strategic advantages and make better informed decisions on future negotiations. Who are the leading P2P platform providers? There are many different P2P solution providers, each with their own unique hook and value-add functionality. Some of the most widlely used and influential companies are SirionLabs, Icertis, DocuSign, Agiloft, and Conga.

 MODERNA The American biotech and pharmaceuticals giant joined the S&P 500 in July. Shares in the company soared 150% in the past year, bringing its market cap near $100m+. Its COVID vaccine is one of the most widely approved in the world.  VOLKSWAGEN CHINA The automaker’s semiconductor woes are easing. Volkswagen's China CEO Stephan Woellenstein expects the shortage to “bottom out this summer” and improve in the back half of the year.  OCADO The UK online grocery store was forced to cancel orders after three warehouse robots collided and sparked a fire. Ocado said no staff were injured and operations would resume the same week.  BOEING The US planemaker reduced production rates and pushed back delivery targets of its 787 Dreamliners jets after a fault was discovered towards the nose. The defect was said to cause no immediate threat to flight safety.

W I N N E R S AUG21

L O S E R S

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GLOBAL NEWS

UNITED STATES

Walmart announces “game changer” warehouse robotics Walmart is outfitting more than half of its US regional distribution centres with a new supply chain robotics and automation solution from Symbotic. Joe Metzger, EVP Supply Chain Ops at Walmart US, called the programme a “game changer” that “will fundamentally alter how products get to stores”.

August 2021

UNITED KINGDOM

UK Food Supply Chain Vulnerable to Cyberattack Food experts warn that Britain’s food supply chain is highly vulnerable to cyberattacks, as it’s almost entirely based on digital logistics. An academic report suggests shortening supply chains and sourcing around 80% domestically.

EGYPT

Ever Given Released from Suez Canal The Ever Given container ship has been released from the Suez Canal after its Japanese owner and local authorities agreed to a compensation settlement. The Ever Given underwent a full inspection at Port Said before leaving Egyptian waters, 112 days after it ran aground in March.

INDIA

Paypal leads $41m funding round in Shiprocket Indian logistics platform Shiprocket has raised more than $41.3m (Rs 305 crore) in the first step of a Series D funding round co-led by Paypal Ventures. It is the logistics firm's biggest single round by far and will fuel international expansion beginning in the Middle East.

INDIA

India Cuts Pal Oil Import Duties The world’s largest palm oil market is opening up to foreign refined imports. In June, Indonesia reduced its crude palm oil export ceiling rates by US$80/mt. While there were originally concerns that they would have too much product to sell, demand is now expected to keep pace.

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PEOPLE MOVES KUMAR SELVAM FROM: A VÍZ BEAUTY TO: ZUME WAS: ADVISORY BOARD MEMBER NOW: VICE PRESIDENT, SUPPLY CHAIN Throughout his career, Kumar Selvam has worked with diverse stakeholders to identify, align, and execute strategic change. Across his 20-year career at PepsiCo, Estee Lauder, and Verizon, he’s helped integrate AOL and Yahoo, reduce lead times, and transition US$200mn in manufacturing operations to Southeast Asian countries. In addition, Selvam is currently enrolled in an advanced Supply Chain Management programme at MIT. ‘Kumar is the exact leader we need to serve our global customers’, said Zume Chairman and CEO Alex Garden. As the new Supply Chain Vice President, Selvam will seek to upgrade the company’s corporate supply chain talent, processes, and systems— strengthening ties with suppliers.

August 2021

"It's not every day that I’m able to merge my passion for the environment with my skills in operations. With Zume, I'm able to do both"

VICTOR SHEVSTOV FROM: CARLSBERG GROUP TO: CARLSBERG GROUP WAS: VICE PRESIDENT SUPPLY CHAIN, ASIA AND AFRICA, CHAIRMAN D&I COUNCIL NOW: EXECUTIVE VICE PRESIDENT SUPPLY CHAIN

PEER GJEOW RASMUSSEN

Formerly a PepsiCo Supply Chain and Operations Strategy Vice President, Shevstov quickly rose through the ranks at Carlsberg. Since 2015, he’s managed supply chains in Asia; in 2020, he led the company’s Diversity and Inclusion Council; and as of July 1st, he’s joined the Carlsberg Executive Committee. As CEO Cees Hart put it: ‘A highly experienced and inclusive leader, with solid end-to-end supply chain expertise, Victor will bring a lot of value to the group’.

FROM: KUEHNE+NAGEL TO: KUEHNE+NAGEL WAS: MANAGING DIRECTOR OF KUEHNE+NAGEL INDIA NOW: MANAGING DIRECTOR FOR KUEHNE+NAGEL SINGAPORE AND MALAYSIA Skilled in freight forwarding, logistics management, and international logistics, Peer Gjeow Rasmussen has worked for almost two decades to make Kuehne+Nagel a global leader in supply chain. With experience in Thailand, China, Denmark, the USA, and India, Rasmussen is poised to excel in the company’s diverse Singapore and Malaysia divisions. Said Jens Drewes, President of Kuehne+Nagel AsiaPacific: ‘Peer’s proven leadership will ensure continued strategic growth and success’. supplychaindigital.com

TIMELINE BLOCKCHAIN TRANSACTIONS

Immutable, secure and error-free, blockchain is gaining traction in supply chain ecosystems. Originally created to record and verify transactions of digital currency, its decentralised format makes the technology ideal for automating smart contracts, proving the provenance of goods and livestock, and securely sharing data between suppliers. E-Livestock Global leverage Mastercard’s blockchain-based Provenance solution to trace ownership, prove health records and track the origin or cattle in Zimbabwe. The system allows buyers and suppliers to transact with full transparency and accoutnability.

Step 1

Step 2

Step 3

Request

Entry

Verification

An individual requests a transaction which can take the form of data, currency or another asset. The request enters the decentralised data base of connected computers, known as nodes, which underpin the blockchain.

The transaction is added to a block, a grouping of digital information that represents the transaction or a group of transactions. The block is sent to each node for verification.

The nodes validate block through a hash process, a complex encryption calculation, which is then added to the blockchain, where it is permanently stored and accessible by participants in the chain.

August 2021

Step 4

Step 5

Step 6

Proof of Work

Transaction complete

The cycle repeats

The nodes receive a reward - usually in the form of cryptocurrencies such as Bitcoin or Ethereum, or another valuable digital asset - for Proof of Work, the term for the effort the nodes expended to verify the block. PoW has drawn criticism as a waste of energy, because more complex calculations require huge amounts of power.

The transaction is completed, the block is added to an updated version of the blockchain, and the updated blockchain is shared among the network.

A new transaction is requested, validated, and added to the blockchain. Unlike a spreadsheet, the blockchain is immutable and decentralised, requiring no human input for security or accuracy. Anyone with access to the blockchain can access the verified information.

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LEGEND

What Happens in Vegas... Name: Frederik W. Smith Job Title: Founder, CEO and Chairman Company:

ou need a gambler’s nerve and a practised poker face to survive the highs and lows of entrepreneurship. But Frederik W. Smith, the founder, CEO and chairman of FedEx, took the notion to extremes. Smith received only an average C grade for the early business plan of what would become Federal Express, outlined in a term paper he wrote as a Yale undergraduate in the mid-60s. His professor did not think much of the young business hopeful’s idea: to rethink contemporary logistics and forge a dedicated delivery system for time-sensitive packages, such as medicine and fragile electricals. In hindsight, the academic seems myopic. But in the earliest days of Federal Express, he was almost vindicated. Smith set the company up with an inheritance fund in August 1971 after returning from the Vietnam war, but soon ran into early financial trouble, losing millions over rising fuel prices. After failing to secure fresh loans to keep his young business afloat – at its lowest, it had just $5,000 left in the bank – he soon found himself at a blackjack table in Las 18

August 2021

Vegas, the fate of his business in the hands of the dealer. He subsequently won $27,000 on that trip to Sin City, and by Monday the FedEx account read $32,000, enough to reportedly keep Federal Express a going concern for another seven days. Though it was not the triumphant turning point that would bookend the second act of a movie version of his life, Smith later reflected in an Entrepreneur magazine interview that the winnings were an “omen that things would get better”. And they did. By the 1980s, FedEx was growing at a compounded rate of 40% annually. Flash forward to 1983 and it posted revenues of $1bn, making it the first American company to do so within 10 years of founding without relying on M&A activity. In 1984 it expanded internationally into Europe and Asia, and in 684 Aircraft 1994 adopted its modern name 200,000+ FedEx. Vehicles Smith remained at the helm 5,000+ throughout these Operating facilities decades of change, leading from the front. Today he continues to lead FedEx, a $77bn+ logistics super power, employing more than half a million people around the world, and shows no signs of slowing down. In a recent investor letter Smith wrote that FedEx is “the network for what’s next, and we have the backing of the sharpest team in the business”.

“ FedEx is the network for what’s next, and we have the backing of the sharpest team in the business”

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Top 100 Leaders in Supply Chain September 2021 To be announced at the Procurement & SupplyChain LIVE Event NOMINATE NOW

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FORTINET

August 2021

FORTINET

DIGITAL SECURITY,

EVERYWHERE YOU NEED IT WRITTEN BY: WILL GIRLING PRODUCED BY: GLEN WHITE

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FORTINET

August 2021

FORTINET

Rick Peters, CISO, explains why cybersecurity is a continuous journey and how Fortinet can help keep businesses secure in the post-COVID world

Rick Peters, CISO

rom an outsider perspective, one might imagine that cybersecurity has been a primary component of every company’s strategy since the beginning of the digital era. And yet, recent headlines demonstrate how much progress is still needed across the board. Founded in 2000 by CEO Ken Xie and headquartered in Sunnyvale, California, Fortinet has established a reputation as being a protector of small, medium and large-scale enterprises, and government institutions globally. Driven by a vision of the future in which the digital world is always safe and trustworthy, it has played an indispensable role in the evolution of cybersecurity with a suite of solutions that are among the industry’s most popular. This comprehensive and complementary portfolio prioritises integration and automation to yield self-healing, faster, and more efficient operations across cloud, networks, and mobile environments. In short, Fortinet enables organisations to thrive. Additionally, Fortinet espouses a philosophy that recontextualises cyber resilience as a journey, not a destination. As such, it recognises that IT and OT systems might change structurally over time but the need to keep them protected remains constant. Sustained protection of the cyber physical landscape and business innovation is achieved by integrating Fortinet’s cutting-edge Security Fabric with the technology alliance ecosystem to match today’s threat landscape. We spoke with Rick supplychaindigital.com

FORTINET

Security-Driven Networking for a Hyperconnected World | Cybersecurity

Peters, Chief Information Security Officer, Operational Technology (OT) North America, to learn more. Having spent almost four decades at the US National Security Agency (NSA) in a variety of managerial and executive roles, it is safe to say that Peters knows what constitutes strong cybersecurity system defences. During his long tenure, he was able to gain credentials, experience, and insight into what it takes to successfully launch a business in cyberspace. “I had the luxury of experiencing and executing missions from both the offensive and defensive sides. Post my IC career, I felt that whatever was next professionally needed to be a departure from working in the government, and private industry afforded such an opportunity.” It wasn’t long before Peters joined the Fortinet team in early 2018. 26

August 2021

“ YOU HAVE TO ALIGN YOUR VALUES WITH THE CUSTOMER’S AND DETERMINE HOW THEY’RE TRYING TO SOLVE THEIR MOST IMPORTANT PROBLEMS” RICK PETERS CISO, FORTINET

FORTINET

RICK PETERS TITLE: CISO INDUSTRY: COMPUTER & NETWORK SECURITY

EXECUTIVE BIO

LOCATION: UNITED STATES Mr. Peters brings to the Fortinet Operational Technology Critical Infrastructure team more than 37 years of cybersecurity and global partnering experience working across foreign, domestic, and commercial industry sectors at the National Security Agency (NSA). As Fortinet’s Operational Technology North American CISO, he delivers cybersecurity defense solutions and insights for the OT/ ICS/SCADA critical infrastructure environments. Prior to Fortinet, Rick led development of cyber capability across Endpoint, Infrastructure, and Industrial Control System technologies at the agency. Previously, Rick also served as an executive leader supporting the Information Assurance Directorate at the NSA. Earlier in his career, he served in a broad range of leadership and Engineering roles including Chief of Staff for the NSA Cyber Task Force and a five-year forward liaison charged with directing integration of cyber and cryptologic solution for US Air Force Europe, Ramstein AFB, Germany.

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FORTINET

“ I DISCOVERED THAT IT WAS A ‘SOLUTIONS FIRST’ ORIENTED ORGANISATION AND THAT GOT ME EXCITED” RICK PETERS CISO, FORTINET

Sharing a mutual desire to expand OT cybersecurity, Peters spoke with Fortinet’s leadership and was impressed by what he found: “I discovered that it was a ‘solutions first’ oriented organisation and that got me excited. If you glance at Fortinet’s patent wall, you naturally realise it’s not just talking about innovation, it’s executing development to achieve it,” he recalls. At the centre of this is Fortinet’s Security Fabric- the industry’s highest-performing cybersecurity platform, powered by FortiOS, with a rich ecosystem. Conceived as a framework to enable both digital innovation and protection from cyber threats, this platform incorporates three key attributes: 28

August 2021

• Broad visibility and protection across the entire attack surface • Integrated and unified security that closes security gaps and reduces complexity • Automated and context aware, it affords faster time to prevention and efficient operations With security taking on increasing prominence within critical infrastructure for Energy and Utilities, Manufacturing, Transportation, and digitally connected building sectors, possessing expert knowledge and comprehension of the

FORTINET

sector’s evolution is critical. “You can employ cutting-edge technology, but you also need to be committed to understanding the industrial environment. You are working with asset owners who have unique goals and a different perspective on what it means to protect the cyber-physical,” says Peters. Furthermore, he identifies two other qualities that put Fortinet ahead of its competition: speed and a transparent, ecosystem-driven approach that mitigates latencies and data loss. At the heart of this is FortiOS, the foundation of the Security Fabric and what Peters considers to be a true “game changer.” Delivering transparency, scalability, and sub-second response times, it employs

FortiGate technology, a “next-generation firewall,” fully capable of accommodating the secure remote access requirements and highly adaptive cloud environments that have gained greater favour since the events of 2020. In fact, the COVID-19 pandemic amplified an entirely new security environment challenge: circumstances made remote working a necessity to maintain business continuity, simultaneously expanding organisations’ surface area for attack and instigating a shift away from on-premises business as the primary means to sustain operations. In this new paradigm, which is still far from reaching a state of equilibrium, supplychaindigital.com

FORTINET

Fortinet is positioning itself as a guide for “new normal” security decision-making. “It's all about building trust,” states Peters. “You have to align your values with the customer’s and determine how they’re trying to solve their most important problems.” In his view, there is no denying that data has become one of the most important assets of the 21st century - the near-ubiquity of Internet of Things (IoT) devices and the mounting viability of 5G are testaments to this, and as executives continue to collect ever-larger volumes of information to assist with operational optimisation. Maintaining a focus on enabling safe and continuous OT operations, Fortinet strives to identify and remediate threats in a way that inspires confidence and helps clients build robust security track records. Fortinet aspires to “get out in front” of cyber threats at all times, a goal it achieves through endpoint detection and response and pre-/post-event analysis. The Fortinet Security Fabric enables the company to break down risks into manageable segments while still maintaining total visibility, therefore preventing customers from missing the big picture in the middle of an attack. “What we’re doing is flipping the script,” adds Peters. “If I were to sit down with a board today, I would probably try to convince them to behave as if they've already been compromised, because it’s highly likely that it will happen at some point in time. It could occur simply by employee error in accepting malware through an email. We've certainly heard many instances of that over the last couple of years.” Moving forward, he is confident that Fortinet will continue to enable even greater threat visibility wherever the customer needs it. The company’s highly adaptive and proactive approach, which captures 30

August 2021

granular elements of security without obscuring the whole, is a clear departure from cybersecurity’s highly reactive prior incarnations. Peters believes that new best-practice standards should coalesce on the idea of “zero-trust access” - “I think we have to insist on earning trust in 2021.” Several notable instances of ransomware attacks in the US confirm the formidable security challenges that modern businesses are facing. However, even here, Peters suggests a cultural solution that Fortinet can offer: stop thinking about the ransomware “payload” as the last event in a chain. “The attacker has probably undergone a period

FORTINET

FORTINET - KEY STATS • Stock symbol: FTNT (IPO October 2009) • 500,000+ customers • 6.8 million units shipped • 776 patents issued; 211 pending • 8,615 employees • US$2.59bn = 2020 revenue • US$3.09bn = 2020 billings

“ I DISCOVERED THAT IT WAS A ‘SOLUTIONS FIRST’ ORIENTED ORGANISATION AND THAT GOT ME EXCITED” RICK PETERS CISO, FORTINET

of reconnaissance and figured out how to distribute their payload. In a distributed attack, like those witnessed in recent instances of supply chain exploitation, a payload is used to attack a broad range of targets and then exploit them based on opportunity and vulnerability.” A multidimensional problem-solver, Fortinet believes in instilling a reliance on people, processes, and technology to secure IT and OT systems. “We’re advocating for the commitment of cybersecurity education as a means of improving situational awareness and realising the power of a wellinformed employee as an asset instead of supplychaindigital.com

FORTINET

2000 Year founded

8,615

Number of employees

$2.59B FY2020 Revenue

August 2021

FORTINET

“COMPLACENCY IS THE ENEMY IN THIS BUSINESS BECAUSE YOU’LL NEVER REACH THE END DESTINATION; CYBERSECURITY IS JUST A CONTINUOUS JOURNEY” RICK PETERS CISO, FORTINET

a liability.” It is the company’s belief that, through education and awareness of the role they can play, employees will naturally bolster cyber defences. “Of course, that's not perfect,” clarifies Peters. “The human element is always going to offer a compelling reason to improve cybersecurity beyond present capabilities.” This takes the conversation not only back to the utility of “zero-trust access” but also behaviouralbased endpoint security. “[The latter] raises the bar by recognising threats and learning from them. It gives you not just cyber resilience but a thorough comprehension of what's going on. I think that's really important: We never want to become complacent. Complacency is the enemy in this business because you’ll never reach the end destination; cybersecurity is just a continuous maturation.” Looking ahead, Peters suggests that 2021 will symbolise a year of growth for the company, both financially and in the ongoing evolution of the Security Fabric. With the size of its initiatives in the North America, Europe, and Asia-Pacific regions doubling in the last 12 months alone, it’s clear that Fortinet has achieved a truly global appeal. Moreover, it will be capitalising on the power of partnerships to expand its problem-solving capabilities. “No one is solving [security] problems alone. We can't be everywhere

- we're not omnipresent - but I think our offering [via partnerships] allows us to be so much more agile and effective working with organisations and businesses of all sizes.” However, commitment to the journey of cyber resilience is, has been, and will be Fortinet’s enduring focus. Peters explains, “Too often, leaders get trapped believing they can just commit a set amount of resources to a particular problem and then consider the issue to be resolved with a point solution. In today’s business world, whether you're in IT or OT, that approach amounts to becoming complacent.” Fortinet is combating this culture through cutting-edge technology and a determination to help others consider cybersecurity in a new way. This, Peters hopes, will grant customers a level of cyber resilience they can trust indefinitely, as Fortinet will share an equal dedication to their organisational objectives. “Our message is that resilience comes through persistence and the ability to continually grow and mature in the solution space. Let's make sure we're protecting that which is most important to our businesses so that we can remain sustainable and viable, not just this year but a decade from now.”

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THE ULTIMATE PROCUREMENT & SUPPLY CHAIN EVENT SEPTEMBER

28th - 30th STREAMED LIVE FROM TOBACCO DOCK LONDON A BizClik Media Group Brand

Confirmed Speakers Include: Sheri Hinish IBM

Ninian Wilson

Group Procurement Director & CEO, Technology Procurement Director Vodafone Procurement Co Sarl

Jim Townsend

Chief Procurement Officer Walgreens

Mark Bromley

Director of Sourcing, Supplier Management Mastercard

Chris Shanahan

VP Global Procurement Thermo Fisher Scientific

EARLY BIRD TICKETS HERE

Creating Digital Communities

PROCUREMENT OUTSOURCING:

HOW TO PARTNER WITH

OUTSIDE EXPERTS To adapt to an unpredictable world, transferring specific procurement processes to outside vendors can reduce costs and re-focus professionals on core products WRITTEN BY: ELISE LEISE

In coming years, supply and demand will fluctuate, new technology will change the way procurement teams operate, and skilled workers will be in short supply. Outsourcing procurement is now a priority. Explained John Piatek, GEP Vice President and Thought Leadership Council Chairman: “In the face of wild swings in consumer demand, trade wars, tariffs, and lockdowns... supply chains bent and frequently broke.” Therefore, companies need to know how to recover. The Rise of Strategic Procurement The pandemic placed procurement on a higher level within business operations. Executive boards that previously overlooked or undersold the value of procurement started to sit procurement managers around the table with strategic advisors to mitigate risks, optimise costs, and drive growth. ‘‘This year has demonstrated the importance of bringing CPOs into C-suite conversations”, explained Jennifer Brown, Principal, Deloitte Consulting. “They bring significant value to the table.”

August 2021

PROCUREMENT

“This year has demonstrated the importance of bringing CPOs into C-suite conversations. They bring significant value to the table” JENNIFER BROWN

PRINCIPAL, DELOITTE CONSULTING

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PROCUREMENT

Minimize supply chain risk. Maximize visibility and growth. Join Jeff Jorge, Firm Leader of Baker Tilly’s Supply Chain and Manufacturing team, to learn how industry leaders create end-to-end supply chain visibility – achieving substantially greater anticipatory, responsive and agile command over potential supply risks.

Watch now

August 2021

PROCUREMENT

“In the face of wild swings in consumer demand, trade wars, tariffs, and lockdowns, supply chains bent and frequently broke” JOHN PIATEK

GEP VICE PRESIDENT AND THOUGHT LEADERSHIP COUNCIL CHAIRMAN

Procurement teams now race to find skilled, third-party vendors to provide services they can neither afford nor prioritise. “Outsourcing of S2C can give companies access to expertise, capabilities, and scale they may not have in-house,” said Iliana Filyanova, Partner for McKinsey’s Manufacturing & Supply Chain. For example, expert outside firms can analyse market conditions, supply specialised goods such as semiconductors or uniquely designed parts, and help develop a strong IT infrastructure.

To be clear, if your team can skillfully outsource, a whole new world opens up: you can rapidly adjust to market conditions, scale up when demand spikes, and scale down when dips hit. Why Outsource? First, you can cut costs. Suppliers in Southeast Asia and other low-cost countries can provide large amounts of materials and products at excellent prices without the political backlash that often accompanies offshoring. But outsourcing has several advantages. When you get specialists on board, you can shorten development times, hire additional staff without having to train them, and digitise your procurement systems thanks to IT experts. Additional Benefits • Increases focus on core tasks • Provides staff more time to fulfil their priorities • Supplies next-gen technology expertise • Reduces operational costs • Helps prevent duplicate payments supplychaindigital.com

PROCUREMENT

These benefits only accrue, however, if your team carefully defines the scope of the operation. When you try to hit the bull’seye on a dartboard, you aim directly at the centre. It takes a certain angle, force, and skill. Likewise, procurement teams must figure out what and how much to outsource. Outsourcing still requires spending, and teams will want to get good data before they sign a final contract. In addition, staff members should be on board with the rationale and objectives of the outsourcing project—otherwise, your darts will miss their target. How To Successfully Outsource Procurement According to McKinsey, teams should focus on three main steps. 40

August 2021

1 | Determine which categories to outsource. Focus on non-core business areas. These are any services that support your core product, such as freight and shipping, facilities, and IT infrastructure. 2 | Select the right metrics. Build supplier scorecards, in which your team decides upon two to three key criteria such as low unit prices, supply chain resilience, and quality of product. 3 | Partner with the appropriate people. Ask potential firms questions to assess their domain expertise; diversify your search to take in a variety of global organisations, and consider their technical skills—even if you’re not hiring the vendor for IT. If these focus areas seem too broad, Deloitte recommends a phase-by-phase process.

PROCUREMENT

DELOITTE: THE SEVEN STAGES OF OUTSOURCING Starting the Search First, companies should Assess and Prepare. These steps include defining vendor requirements and starting to engage. In these phases, you may do some background research but not engage with them directly. Web searches can yield initial results, and consultants can also help—especially those who know the strengths and weaknesses of your industry. After you have your list narrowed down, you can produce a strong, detailed RFP. Naturally, your RFP will attract the relevant suppliers, and you’ll be able to move to Evaluate. If you’ve chosen strong metrics, two to three top vendor proposals should stand out. Be forewarned, Deloitte said: the next part is tricky. Committing, or negotiating your final contracts, will lock you into a potentially multi-year collaboration with a vendor. Take your time: you can deliberate over competing offers, as well as request that additional support be built into the contract.

Which Procurement Services Can Your Team Outsource? According to GEP, procurement outsourcing involves shifting sourcing, transaction management, or category management to a business process outsourcing (BPO) provider. Since ‘procurement outsourcing’ is a broad, somewhat vague term, we’ve broken it down into three types of services. • Transactional Processing purchase orders, RFPs, supplier compliance. • Tactical Managing spend, performing on-thespot purchases, providing manager training. • Strategic Handling long-term sourcing initiatives, managing non-core operations end-to-end.

“CPOs are uniquely positioned to help their organisations navigate a historically disruptive time and build the agility required to thrive” RYAN FLYNN

PRINCIPAL, DELOITTE CONSULTING supplychaindigital.com

PROCUREMENT

Negotiating the Best Deal Advocate for your best interests! “I moved forward to negotiate with a current contract manufacturer with whom we had an important volume commitment with high prices,” said Elodie Cramer, Associate Director of Biogen. “We were in a singlesource situation, with no active alternatives.” She opted to pursue dual sourcing, as well as insist on open vendor discussions. At the conclusion of the talks, she had bartered better terms: 29% lower costs, 75% less volume commitment, and improved vendor quality and service. Additionally, teams should discuss details such as how to optimise taxes, 42

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meet regulatory compliance, and protect ESG standards. Safety-catch measures like these may seem to extend the outsourcing process, but they’ll ensure that you don’t end up spending more over the long term. Compliance, after all, can drive 30% to 50% of savings, and talking about it upfront is for the best for all concerned. Closing the Case Once you’ve reached acceptable terms, you can Transition, handing the project work and resources over to your vendor, and Optimise, following up to manage and improve the relationship. Don’t forget to dot your i’s and cross your t’s—Deloitte even

PROCUREMENT

recommends an end checklist. Sign the contract; create a people transition plan; complete consultations with any oversight committees. After signing the paper with a flourish, you can then rest easily, confident that you’ve followed a strategic outsourcing system.

“Outsourcing of S2C can give companies access to expertise, capabilities, and scale they may not have in-house” ILIANA FILYANOVA

PARTNER, MCKINSEY’S MANUFACTURING & SUPPLY CHAIN

Companies To Emulate Procter & Gamble, Unilever, Slack, Alibaba, Acer: even major multinational companies seek to outsource specific systems, technical skills, or materials. When Unilever integrated its ERP platforms into a single system, outsourcing saved the company an annual €700 million. Slack outsourced its universally-known colourful design label to MetaLab. Alibaba outsourced to US firms to compete with eBay. Acer outsourced manufacturing to maintain a small, agile team. As a result, these companies improved their international reputations, offset their internal weaknesses, and built strong vendor partnerships. As executives increasingly turn to procurement to make their global operations more cost-efficient and more resilient, teams that strategically outsource work will stand a better chance of bringing good news to the next management meeting. Said Ryan Flynn, Principal, Deloitte Consulting: “CPOs are uniquely positioned to help their organisations navigate a historically disruptive time and build the agility required to thrive.” Yet to do so, they must act with intent. “Successful outsourcing—outsourcing that drives transformation and helps achieve broad strategic goals—requires companies to follow a disciplined process,” wrote Deloitte. In short: Outsourcing initiatives succeed not by luck, but by design.

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Top 100 Leaders in Supply Chain September 2021 To be announced at the Procurement & SupplyChain LIVE Event NOMINATE NOW

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PARKER HANNIFIN

August 2021

PARKER HANNIFIN

WRITTEN BY: JANET BRICE PRODUCED BY: KARL GREEN

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PARKER HANNIFIN

August 2021

PARKER HANNIFIN

The road to a perfect delivery is no deviations in the supply chain, according to Dirk Falkenreck, EMEA Distribution and Value Add Centre Manager, Parker Hannifin

Dirk Falkenreck, EMEA Distribution and Value Add Centre Manager

lbert Einstein was quoted as saying “Scientists investigate that which already is. Engineers create that which has never been.” Creativity is certainly evident in the case of Parker Hannifin, the global leader in motion and control technologies. The company’s 103-year history includes involvement in major engineering landmarks – from supplying the fuel system for the Spirit of St Louis to being involved in the recovery of Apollo 13. Originally founded by Arthur Parker building pneumatic brake systems in Cleveland, Ohio in 1917, Parker has consistently grown and diversified over the years. The business purpose focuses on ‘enabling engineering breakthroughs that lead to a better tomorrow’. Over the years Parker Hannifin technologies has helped its customers conquer space, distance, time and motion - making life better for people around the world. And the founder’s legacy of trust, empowerment and drive to serve customers is still felt within the global enterprise, which now employs more than 50,000 people, according to Dirk Falkenreck, Parker’s EMEA Distribution and Value Add Centre Manager. supplychaindigital.com

PARKER HANNIFIN

Leading with Purpose

Error-free supply chain with no deviations Falkenreck manages the warehouse and logistics in Parker’s EMEA operations, ensuring that each precision-engineered solution for commercial, mobile and industrial markets travels through the supply chain. “The road to a perfect delivery is fast, error-free and inexpensive, with no supply chain deviations,” said Falkenreck speaking from the regional distribution centre in Greater Bielefeld, Germany. He highlights the importance of an effective process in warehouse distribution from handling, storage and shipping and how this enhances productivity - which is vital for the supply chain of Parker’s products. The company started its journey to developing a lean warehouse 15 years ago, with an owned developed lean toolbox. 50

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The EMEA Distribution and Value Add Centre team manages: • 10 warehouse locations across EMEA from Norway and Finland, to Turkey and Africa • Received goods from more than 400 production plants worldwide • 15,000 customer shipments each week • 2.5 million orders every year. Falkenreck explained: “Our distribution centre serves close to 15,000 external customers every week. We get products from our divisions - approximately 100 manufacturers in Europe – and store them here prior to distribution.

PARKER HANNIFIN

PARKER HANNIFIN Parker Hannifin operates in 50 countries around the world, supporting 100 divisions with 320 manufacturing locations. The company’s industrial distribution network extends to approximately 13,000 locations globally. It includes servicing ParkerStores - a global network of independently-owned industrial retail operations with more than 3,000 service points around the world.

“ WE WANT TO WORK WITH OUR CUSTOMERS AS CLOSE AS POSSIBLE TO REALLY BE ABLE TO SAY THE BEST SHIPMENT THE CUSTOMER CAN GET IS FROM PARKER HANNIFIN” DIRK FALKENRECK

EMEA DISTRIBUTION AND VALUE ADD CENTRE MANAGER, PARKER HANNIFIN,

“My role is to support and lead the transformation of the distribution operations. We started this journey in 2002 - there was nothing before. Nearly 20 years on, we employ 250 people in 10 locations and deal with customers across the globe. “The first phase of the transformation started in 2015, when we started to review the overall warehouse footprint in Europe. We created an EMEA supply chain team, responsible for managing all warehousing and distribution services. “But what was next for distribution? The answer to that question was quite complex, so our team commissioned external support to conduct ‘centre of gravity’ studies”, he said. “This process helped us to determine the best locations for warehouses, to optimise customer shipments. supplychaindigital.com

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PARKER HANNIFIN, REMODELLING THE LOGISTICS SUPPLY CHAIN Dirk Falkenreck, EMEA Distribution & Value Add Center Manager, Parker Hannifin shares how Miebach helped increase efficiency, improve customer service and create a 2025 vision In 2006, to gain an understanding of the future of logistics, Parker Hannifin completed their first centre of gravity study in Europe. Since that time, the company has seen tremendous growth through acquisitions, adding approximately 50% more locations, says Dirk Falkenreck, EMEA Distribution & Value Add Centre Manager at Parker Hannifin.

Last but not least, the third phase consisted of establishing the business case,” explained Falkenreck. “In the end, Parker looked at over 800 scenarios to evaluate all the possibilities in the Parker Hannifin network to capture and commingle all the different possible network alternatives into one final recommendation.” After a great amount of analysis and with the help of Miebach in aligning stakeholders, Parker Hannifin reached a final solution.

SPREAD OND OR INUM

The increased organisational complexity drove Parker Hannifin to create a vision for 2025 and identify areas for improvement. With over 60 Finished Goods (FG) warehouses in Europe and a need to simplify, Parker wanted to better understand innovation, optimisation, and how they could leverage robotics to increase efficiencies and improve customer service. “We wanted to create a better customer experience and explore the future for our footprint in Europe,” said Falkenreck. That was when Miebach Consulting Group and NEBA Consulting jumped on board. “We structured the project into three phases. The first phase consisted mainly of data crunching and assessment of Parker’s complex network The second phase dug into network alternatives to identify potential areas for cost, risk, resilience, sustainability, and network improvements.

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Falkenreck continued, “There was a very professional approach which I really appreciated. The atmosphere of the project team was just amazing. There was always a willingness to react to demands or changes in the project. As we all know, the journey is never straightforward, there can be surprises, and we get input from here and there. The flexibility Miebach showed enabled us to achieve the results that we did.”

PARKER HANNIFIN

“Choosing the best locations means we can cut shipment times and costs and reduce emissions. This team is on target to reduce our carbon footprint by 20% by around 2025,” Falkenreck continued. Once Parker had a clear picture of the road forward, the company focused on three pillars to become the best in class distribution centre organisation. Parker has adopted the independent Warehouse Education and Research Council (WERC) benchmark for its warehouses globally. The WERC defines key processes and performance indicators for world-class organisations and Parker is focused on key elements such as: 1. Simplification of procedures and locations 2. Technology and innovation 3. Customer experience Falkenreck continued: “We want to work with our customers as closely as possible and be the best shipment provider. There 54

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are many tools and procedures developed to make sure we work in an integrated way to make that happen. “For example, we use an extended value stream map to look at every dimension of a shipment. We start with physical elements, such as labelling, documentation and electronic data to see how information will be submitted to customers. We also analyse customer receiving processes, to identify any possible issues that may arise; this helps ensure that our process will help resolve potential blockages. “Our solutions can be customised according to customer needs. The real customer experience always comes if you exceed people’s expectations. We often help people to develop solutions they haven’t thought about; that creates a cost benefit for them, and an improved experience. Some customers just need us to comply; with others we can offer greater support and genuinely become better together.” Alongside customer experience, lean warehousing, new technology and digitalisation are fundamentals to Parker’s approach.

PARKER HANNIFIN

DIRK FALKENRECK TITLE: EMEA DISTRIBUTION AND VALUE ADD CENTRE MANAGER INDUSTRY: ENGINEERING LOCATION: GERMANY Dirk Falkenreck (53) born in Germany, lives in the Bielefeld region with his wife and four children. Hobbies and interests include Rotary Club, sport and chess. Falkenreck joined Parker Hannifin in 1995 and heads up the EMEA distribution network – ensuring that each precisionengineered solution for commercial, mobile, industrial and aerospace markets travels seamlessly through the supply chain. It’s a long way from his first role in the company. Initially appointed as IT manager in the hose products division, Falkenreck moved to Bielefeld, Germany, where he implemented a customer service centre and distribution centre for Parker’s largest division in EMEA.

“CHOOSING THE BEST LOCATIONS MEANS WE CAN CUT SHIPMENT TIMES AND COSTS AND REDUCE EMISSIONS” DIRK FALKENRECK

EMEA DISTRIBUTION AND VALUE ADD CENTRE MANAGER, PARKER HANNIFIN

supplychaindigital.com

PARKER HANNIFIN

“ THE ROAD TO A PERFECT DELIVERY FROM PARKER HANNIFIN IS FAST, ERROR-FREE AND INEXPENSIVE, WITH NO DEVIATIONS IN THE SUPPLY CHAIN” DIRK FALKENRECK

EMEA DISTRIBUTION AND VALUE ADD CENTRE MANAGER, PARKER HANNIFIN,

Lean warehousing systems Lean tools make sure there are control points in the process and prevent failure or deviation. Employees play a key role in the lean journey, but tailored warehouse systems and process design are also important. Falkenreck explained: “By presenting material in an accessible way, our people don’t need to spend time interpreting or guessing information; they can act quickly, efficiently and consistently. Structuring information in a way that supports natural processes takes account of potential variables, such as weight and dimensions,” he said. This mistake-proofing approach minimises the likelihood of human error. Parker is committed to achieving a ‘zero incident’ environment and keeping its people safe. Falkenreck continued: “We used to move materials with forklift and a driver, but now use automated guided vehicles (AGVs) in warehousing inboard areas. “Robotics technology has reduced people moving between functional areas, as well as improving safety. As some of our heavy products weigh more than 60 kilos, lifting and moving stock needs to be carefully managed. 56

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With more than 100 shipping locations it is vital that logistics are seamlessly in place. “The inbound process starts at the division manufacturing workbench,” said Falkenreck. “From the manufacturing finish line, colleagues press a button and the system automatically notifies our distribution centre when the product will arrive.” This ensures traceability and enables automation throughout the supply chain. Partnership power Miebach, PTA and LeanQuest are all partnering Parker Hannifin on its digital journey. This support has been helpful to inform investment choices, transform services and create leaner systems. The company only partners with suppliers who share the beliefs of premier customer

PARKER HANNIFIN

service, maintaining the highest quality standards, on-time delivery and a culture of continuous improvement. Parker views suppliers as partners who help the business remain competitive in the marketplace and achieve its growth objectives. “Having partners who share our goals to serve our customers well is key for us,” commented Falkenreck. Continuing the transformation journey Commenting on Parker’s advancements over the past decade, Falkenreck said it was amazing how the company had evolved. He predicts that future workplaces will be characterised by two segments. “One part of the process becomes simpler, as robots take over some of the work; but others will become more complex, because you have to manage far more sophisticated

systems. This means companies need engineers in place to understand what AI is doing, configure systems and adjust service flexibility aligned to customer needs. Lean operations will remain critical for our team – with the scope to layer technology on top as services and business confidence increase.” “We are very proud of our journey over the past 10 years and the strong partnerships with customers. But there’s more to come, which is exciting. We plan to review our manufacturing locations and redesign inventory flow for the complete products. It’s a major shift, but the right thing to do. This work will help us achieve even greater logistics efficiency and reduce emissions,” he said.

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THE ULTIMATE PROCUREMENT & SUPPLY CHAIN EVENT SEPTEMBER

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Group Procurement Director & CEO, Technology Procurement Director Vodafone Procurement Co Sarl

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Chief Procurement Officer Walgreens

Mark Bromley

Director of Sourcing, Supplier Management Mastercard

Chris Shanahan

VP Global Procurement Thermo Fisher Scientific

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Creating Digital Communities

GLOBAL TRADE MANAGEMENT: THE BIG PICTURE

TO EFFICIENCY Global trade management is vital in today’s global supply chain landscape, where disruption in international business is routine and risk is high WRITTEN BY: RHYS THOMAS 60

August 2021

SUPPLY CHAIN

lobalisation has opened the doors for businesses to reach more customers and access greater opportunities than ever before. But for every benefit to global trade lies a challenge for the supply chain. These challenges have been compounded by the COVID-19 pandemic, but the virus was not catalyst of these issues. Fragmented regulatory standards, shifting customs protocols and tariffs, and fluctuating manufacturing capacity all contribute to disruption, and have all been obstacles organisations faced long before lockdown. What is Global Trade Management? These challenges are not going away, and sooner or later organisations of all sizes will find they are bottlenecked by a lack of information somewhere in their global supply chain. Global trade management

(GTM) is the process of solving that quandary by gaining comprehensive visibility and control over trade activities around the world. GTM practices help organisations streamline their activities and deliver new efficiencies and cost savings. It extends to regulatory compliance, customs and border management, logistics, procurement, and all associated financing. Good GTM simplifies resource allocation, the flow of information and real-time data, strengthening the position of every stakeholder. Clint Reiser, Director, Supply Chain Research at ARC Advisory Group, says the strategy also gives organisations the ability to mitigate or protect against disruption and better plan for the ‘hidden’ intricacies of international business that are “compounded by each global trade participant’s unique position in the field”. supplychaindigital.com

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“As compared with domestic distribution management, global trade management introduces the complexities of multiple languages, time zones, currencies, and modes of transport,” he added. “Further, there can be more than a dozen parties involved in a single international shipment. The laws governing global trade are numerous, highly complex, and ever-changing.” The average end-to-end shipment can routinely involve up to 25 distinct organisations, around 100 people, and hundreds of interactions and data exchanges. In complex global trade, where flexibility and agility is key, minimising or eliminating errors is critical. Just a small miscalculation or disruption can upset this delicate balance, Ed Jennings, CEO of Quickbase says: “When there’s any kind of disruption to a supply chain – big or small – it’s critical to have access to all data in real-time to make decisions.” GTM and the Semiconductor Shortage The disrupted global flow and shortage of semiconductor chips has come to epitomise the need for GTM. One of the world’s most valuable and sought-after manufacturing components, used in everything from mobile devices to cancer research equipment and military hardware, it is a truly global commodity – designed on one continent, manufactured on another, installed in an assembly line 1000 miles away, and distributed around the world – and as such encapsulates each and every one of these challenges. Supplyframe’s latest Commodity Intelligence Quarterly report indicates that shortages are expected to persist well into the first quarter of 2023, at a minimum. Lead times have grown to 52 weeks-plus in extreme cases, according to the report,

“ You need supply chain and procurement professionals in the conversation earlier, and more involved” SUNDAR KAMAK

HEAD OF MANUFACTURING SOLUTIONS, IVALUA supplychaindigital.com

SUPPLY CHAIN

placing the greatest strain on automotive and consumer electronics sectors, with ripple effects reverberating throughout their supply chains. While shifts in demand caused by the pandemic is cited as the main catalyst of chip shortages, Sundar Kamak, Head of Manufacturing Solutions at Ivalua, says manufacturers were already heading towards a potential crisis before the outbreak. “The demand and supply is simply directly proportional to consumer expectations,” he says. “If you look at the automotive industry, consumers don’t want a key, they want a button. So now every organisation is changing in line with that expectation. But what you soon realise is that you cannot introduce digital in some areas of the vehicle, and not in others. “If you look at the screen in a new Tesla, for example, it is much higher quality 64

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“ Global trade management introduces the complexities of multiple languages, time zones, currencies, and modes of transport” CLINT REISER

DIRECTOR, SUPPLY CHAIN RESEARCH, ARC ADVISORY GROUP

SUPPLY CHAIN

and resolution than the screen I use for work everyday,” he adds. “Suddenly you are introducing more technology than was anticipated. The demand for semiconductors for this technology goes up, but the supply cannot keep pace with it.” The long-term solution is to solve the supply chains and involve departments within a business that understand the wider landscape. “You need supply chain and procurement professionals in the conversation earlier, and more involved. The traditional system of negotiation between manufacturer and supplier no longer works,” Kamak says. “Suppliers have choices, they have more customers because of innovation and more competitors in the market. So you need to include supply chain sooner. You need to treat them like partners, earn their trust and give them trust so they can participate very

Key benefits of good global trade management ELIMINATING CUSTOMS DELAYS Delays at customs are routinely caused by incomplete or erroneous documentation. The result can cause organisations to run out of stock or to hold excess inventory – both disrupting the flow of goods and reducing cost efficiency. FMCG and perishables are particularly vulnerable.

MINIMISING ORDER PROCESSING DELAYS Filling out paperwork and ensuring documentation is handled accurately and on deadline can be time consuming and costly where errors persist. GTM systems reduce missteps, reduce the amount of manual work and human oversight, and streamlines document handling.

STREAMLINING SALES SCREENING Automating international sales order screening through a global trade management platform instantly boosts efficiency, removing the need to manually check whether customers are on sanctioned party lists or are associated with compliance issues. Orders are automatically cleared or flagged, reducing the payment process and increasing cash flow.

ACCURACY AND VISIBILITY IN LANDED COSTS Another time-consuming administrative task where errors can cause leakage and unexpected outlay is landed costs. Actual costs can often be higher than expected, with associated costs, including discounts and rebates, accidentally left out through manual input. The result can leave organisations with goods that put the transaction in the red. supplychaindigital.com

SUPPLY CHAIN

August 2021

SUPPLY CHAIN

“ When there’s any kind of disruption to a supply chain – big or small – it’s critical to have access to all data in real-time to make decisions” ED JENNINGS CEO, QUICKBASE

early on in the product design and product development process. "I wouldn't say organisations and manufacturing companies are not doing it,” Kumak adds. Before but it's not done consistently. And these are not concepts which are revolutionary.” Traditionally a standalone concept, global trade management has become homogenised to a degree, along with the digital transformation of all operations and processes in the supply chain. It is a concept now bound to ERP systems, spend management and sourcing solutions, and will only become more important as the world begins to recover from the pandemic. COVID-19 has cast the world into an uncertain future, and the balance between risk and reward in International business is as complex as ever. To survive and thrive in the post-pandemic world, GTM will be key.

supplychaindigital.com

DHL AND UPS: HOW IS 3PL EVOLVING IN 2021?

Philippe Gilbert, President of UPS Supply Chain Solutions, and Phil Roe, CCO and Strategy Director at DHL, discuss the shifts in third-party logistics WRITTEN BY: ELISE LEISE & OLIVER JAMES FREEMAN

LOGISTICS

o optimise their supply chains, many companies have turned to third-party logistics providers— 3PLs—to outsource how they manage inventory, stock warehouses, fulfil customer orders, pack pallets, and handle returns. Especially in the midst of the pandemic, corporations have struggled to satisfy their customers, mitigate shipping delays, and react to rapid spikes in demand. In short: if logistics isn’t your core competency, rely on the experts. To examine the current state of 3PL, we decided to have a quick roundtable with Philippe Gilbert, President of UPS Supply Chain Solutions, and Phil Roe, Chief Customer Officer and Strategy Director at DHL Supply Chain. Here’s what they have to say on the subject: What are the fundamental benefits of partnering with a third-party logistics provider? ‘Proper supply chain visibility and planning is one of the key challenges facing modern supply chains’, says Phil. ‘Supply chains now cover multiple jurisdictions across significant distances. They’re also omnichannel, meaning that it’s now standard practice for there to be multiple routes to the customer’. Philippe adds that, ‘3PLs can deliver efficiencies and resources across the supply chain that are difficult for most businesses to replicate’. According to a study from UPS Global Logistics, five major challenges drive companies to outsource:

Top Phil Roe, CCO and Strategy Director at DHL Bottom Philippe Gilbert, President of UPS Supply Chain Solutions

1. 2. 3. 4. 5.

Limited Space Increased Customer Expectations Faster Order Fulfilment Reduced Labour Costs Multiple Fulfilment Channels

Now, the pandemic has accelerated 3PL adoption. In that same UPS survey, 29% of respondents indicated that they’d switch to outsourcing their logistics as a direct result of the past year. ‘One of the biggest issues impacting our current customers is the timing on inventory levels’, says Philippe. ‘Production delays out of APAC have pushed receipts and built back orders of products’. supplychaindigital.com

LOGISTICS

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LOGISTICS

How are 3PLs helping businesses cope with broader disruptions, such as Brexit, transport logjams, and driver shortages? ‘We can categorise supply chain disruptions into three broad areas’, explains Phil. ‘Demand-side, supplyside, and environmental. Some of these are easier to control than others, but all benefit from proper oversight and the ability to quickly adapt’. When the Brits finalised Brexit, for example, DHL scaled up areas that needed specialist support, such as customs processing. ‘We can leverage our network and redeploy on demand’, he explains. As for UPS, the company developed a post-Brexit SCS solution that enabled its clients to keep inventory closer to their UK customers. ‘We can maintain a broad portfolio of carriers and providers to quickly adapt to supply chain disruptions’, Philippe says. ‘This allows customers to avoid service

“ 3PLs can deliver efficiencies and resources across the supply chain that are difficult for most businesses to replicate” PHILIPPE GILBERT

PRESIDENT, UPS SUPPLY CHAIN SOLUTIONS

delays, added costs, and administrative burdens associated with customs clearance’. Next, this conversation would be incomplete if we didn’t talk about how the boom in e-commerce has affected 3PL. Do you anticipate that e-commerce growth will continue? ‘The growth of the past 18 months shows no sign of slowing down’, Phil says. ‘Consumer habits have altered, in some cases, permanently. Over the last eight months, DHL has seen a 150% increase in its fulfilment division—reflecting the soaring demand’. To keep up, the company has supplychaindigital.com

LOGISTICS

focused on data and automation, as well as deploying robotics solutions alongside its employees. ‘Whether that’s automated pallet systems or pick-and-pack robots’, Phil explains, ‘we’ve coupled technology and data to manage demand, meet customer expectations, and smooth out labour requirements’. Fundamentally, e-commerce is driving demand for additional labour and space. ‘This presents a unique opportunity for 3PL’, Philippe says. ‘New entrants in retail platforms, though currently small, will look to disrupt the giant retail players. They’ll be closer to their customers in the city. And they’ll try to unify and digitalise SME brick-and-mortar retailers’. How are shifting customer expectations—such as the next-day “Amazon Effect”—impacting 3PL? ‘We see 3PLs expanding their networks to be closer to consumers and integrating fulfilment with last-mile delivery’, says Philippe. ‘They have to expand their reverse logistics, including investments in warehouse space’. He suggests that data analytics can enhance visibility and help 3PL companies address inefficiencies. ‘With the right technology’, he says, ‘businesses can access accurate, connected data and derive actionable insights’. Predictive and prescriptive analytics, when coupled with artificial intelligence and machine learning, can help companies understand when, why, and how supply chain disruptions occur. ‘This way’, Philippe adds, ‘they can prepare for them— or better yet, sidestep them completely’. In addition, customers now expect companies to follow through on their social commitments... 72

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“ Sustainability provides us an opportunity to collaborate with our customers” PHIL ROE

CHIEF CUSTOMER OFFICER & STRATEGY DIRECTOR, DHL SUPPLY CHAIN

Can 3PLs help organisations deliver on their ESG objectives, such as reducing carbon emissions? Absolutely. Through UPS’s EcoResponsible Packaging Programme, for instance, the company evaluates its clients’ packaging processes to determine the best way to protect their products and the planet. In addition, the corporation works with carriers on creative, loweremissions solutions. ‘By 2025, we plan to source 40% of all ground fuel from sources other than conventional gasoline and diesel’, Philippe explains. ‘That’s

LOGISTICS

nearly double what we used in 2016’. By then, 25% of UPS’s total electricity will come from renewable sources. As for DHL, the company offers a portfolio of GoGreen solutions, which offers its customers a range of ways to minimise their impact on the environment. ‘This includes everything from carbon reporting and analytics solutions to investments in internationally-recognised climate protection projects’, says Phil. ‘Sustainability provides us an opportunity to collaborate with our customers’.

Why Do You Need a 3PL? Third-party logistics providers can streamline business operations. First, you can focus on your core products. Second, you can capitalise on outside technologies and ready-to-go solutions. Third, you gain the flexibility to rapidly scale up and scale down in response to spikes and dips in customer demand. In sum: if you’re going to succeed, you need sourcing expertise.

supplychaindigital.com

UPS Supply Chain Solutions: The Stats • 800+ customers worldwide • 1,000+ global distribution facilities • 25M+ square feet of warehouse space • 120+ countries

Yet, it’s often challenging to serve customers in highly regulated industries. How can companies overcome those hurdles? ‘Companies operating in highly regulated industries such as pharmaceuticals and life science face extra pressure on their supply chains’, Phil explains. ‘Dealing with rapidly growing changes then requires depth and breadth, which is something a global business such as DHL can offer’. To overcome regulatory challenges, DHL offers its clients dedicated sector specialists who understand niche industries but still have access to its global network. 74

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At the end of the day, Philippe comments, 3PLs must take responsibility for running compliant programmes and services. ‘Licensed or not’, he says, ‘they’ll need to work with their highly regulated customers to ensure that SOPs (Standard Operating Procedures) and audit processes are in place’. What do the next 12 months hold for 3PL providers? ‘Providers will focus on mastering omnichannel e-commerce’, says Philippe. ‘You’ll see faster last-mile delivery, more

LOGISTICS

sustainable logistics and packaging, and better forecasting for risk management’. Overall, he notes, 3PL providers will invest in data analytics and new warehouse technologies to provide greater visibility into their supply chains. For example, UPS is rolling out a new suite of digital engagement tools. According to Philippe, the company introduced a new UPS Forwarding Hub, UPS Customs Brokerage, and CoyoteGo portals to help their supply chain solution clients. In addition, its e-Fulfilment and Ware2Go products help small- and medium-sized businesses

outsource with ease. ‘We’ve focused on adopting technologies to improve our operations’, Philippe says. Finally, UPS’s Advanced Technology Group (ATG) has implemented robotics, drones, artificial intelligence, autonomous vehicles, new software platforms, and sensor technologies to increase its 2021 revenues and cut bottom-line costs. Says Philippe: ‘With these tools, we can meet customer expectations for real-time tracking, end-toend visibility, and personalised service’. And there you have it: the future of 3PL. supplychaindigital.com

TECHNOLOGY

QR TECHNOLOGY:

THE BRIDGE TO A SUSTAINABLE

FASHION INDUSTRY Supply Chain Digital discusses how the fashion industry supply chains can create a more circular economy and be more sustainable with QR code technology

WRITTEN BY: GEORGIA WILSON

s one of the top polluting industries, Sara Swensen, Global Senior Manager Sustainability at Avery Dennison explains “there's debate whether it's the third, fourth or fifth most polluting industry, but it's generally well known that about 4% of global carbon emissions and about 20% of water pollution comes from the fashion supply chain. So obviously it’s massive. On the US side, we dispose of about 70 pounds, which is about 30 to 32 kilogrammes of clothes, every year. So it's a growing impact that has dramatically started impacting the world.” Could Technology be the Answer to Sustainability Challenges? Year after year, over 100 billion new garments are made, with US$450bn worth of textiles thrown away around the world. The emergence of a ‘fast fashion’ society has resulted in the average person not only buying 60% more clothes than in 2000 but also discarding more. On average, a family in the western world throws away 30kg of 76

August 2021

clothing a year, with only 15% being recycled or donated. “Over the past 20 years, environmental issues have ramped up and ‘fast fashion’ is partly to blame,” says Swenson. “Fast fashion has changed the mindset of how quickly styles and consumers want to update their clothing lines. But over the past 20 years, consumers purchased about 60% more clothes than we did in 2000 and we're not circulating those materials back in. They're really going in a linear fashion: take, make and waste out. “We've really switched from having high quality garments to lower quality, more plastic based garments, and out of those that are manufactured every year, about 30% are just overstocked, they're never even sold. So there's all these waste stitches along the supply chain that need to be figured out, and then the recirculation of those raw materials back into the supply chain. None of that's happening with fast fashion, because everything is done so quickly and consumers want new products so much faster than ever before.” Adopting a circular economy approach, instead of a linear one can help the fashion industry to become more sustainable. “A Circular economy is really about designing out that waste and pollution that I was talking about within the supply chain, and then keeping those products and materials in use for as long as possible, and then

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TECHNOLOGY

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TECHNOLOGY

“ Technology is probably going to be the easiest way to create data to show that brands are making more sustainable actions” SARAH SWENSON

GLOBAL SENIOR MANAGER OF SUSTAINABILITY AT AVERY DENNISON

regenerating them back into the supply chain at the end of their life,” says Swenson who strongly believes that this is important to do, “because A: we all know the risks to the environmental factors, and then B: customers and consumers want us to solve these problems. We're getting more and more educated consumers that are willing to dive into the data. Brands are no longer able to greenwash and say, ‘Hey, we're doing something sustainable’, they actually have to prove they’re doing something sustainable with the data that backs it up or approves it.”

Mobile Technology: The Future of Sustainable, Transparent and Ethical Fashion With 60% of consumers valuing brands that are transparent about their operations, fashion brands are turning to mobile technology such as QR Codes and NFC tags to provide their customers with endto-end information on the product they have purchased from raw materials and production, right through to distribution and beyond. “Technology is probably going to be the easiest way to create data to show that brands are making more sustainable actions, that they are not just greenwashing their sustainability progress. It also gives supply chain stakeholders the right to ask questions and engage, as well as consumers supplychaindigital.com

TECHNOLOGY

to understand “if you make this choice in how you're going to dispose of our garments, this is going to be your environmental impact. So it provides the right data that's available to both the consumer and the brand and other stakeholders to make those choices,” says Swenson. “Right now we're asking stakeholders to make choices without data and without an easy solution. Consumers are not going to go through extensive links to find the right recycler, or find the right reseller. But if that information is at the tip of their fingers, on the garments that they can access, then they're much more likely to make those appropriate environmental decisions as well.” With it still being legislation to have physical care and contents information written on a garment, Swenson adds that “many brands are now adding a QR code with information such as how to better wash your garment, how to take care of it so that it has a longer life, the benefits of high quality garments that you want to dispose of, but is still good quality to resell, how to brand authenticate it, and then how it can be recycled at its end of life.” 80

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Whilst Swenson explains that “labels are by no means the solution that is going to solve everything in the apparel supply chain, it is the place that most people go to find more information on their environment.” Fashion brands adopting QR and NFC technology include PANGAIA, Sheep Inc., and Skopes. PANGAIA In May 2021, materials science company PANGAIA partnered with EON to create ‘digital passports’ for its products. The lifestyle products brand uses QR code technology to accelerate greater transparency, traceability and circularity in the fashion industry, inspiring responsible consumer choices. QR codes are printed directly onto the care labels unlocking a bespoke digital experience when scanned with a mobile phone. The experience takes the customer on a journey from the product's origin through to purchase, dyeing, production, distribution, transportation and aftercare. The digitalisation of this experience allows customers to be updated in real-time, bridging the gap towards a full circular model, providing authenticity and visibility of lifecycle data.

TECHNOLOGY

THE IMPACT ON THE ENVIRONMENT To paint a picture of the fashion industry’s current impact on the environment, the Sustain Your Style Initiative breaks it down into eight key areas:

Water Pollution 20% of industrial water pollution comes from textiles treatment and dying. 200,000 tons of dyes are lost to effluents every year. 90% of wastewaters in developing countries are discharged, without treatment, into rivers.

Water Consumption 1.5trn litres of water is used by the fashion industry each year. 20,000 litres of water is needed to produce 1kg of cotton. 100mn people in India do not have access to drinking water; 85% of daily needs for the entire population of India could be covered with the water seed to grow cotton. 200 tons of freshwater is needed to dye one ton of fabric. 750mn people in the world do not have access to drinking water.

Microfibres in the Ocean Every time a synthetic garment is washed, 1,900 individual microfibres are released into the water.

85% of human-made debris around the world’s shorelines are microfibres. 190,000 tons of textile microplastic fibres end up in the ocean.

Waste Accumulation On average, a family in the western world throws away 30kg of clothing a year. Only 15% of clothing is recycled or donated. Synthetic fibres can take up to 200 years to decompose, which are used in 72% of clothing.

Chemicals 1kg of chemicals is needed to produce 1kg of textiles. 23% of all chemicals produced worldwide are used in the textile industry. 27% of the weight of a ‘100% natural- fabric is made of chemicals.

Rainforest Destruction 70mn trees are cut down every year to make clothes. 30% of Rayon and viscose clothing comes from endangered/ancient forests. 5% of the apparel industry uses forestbased fabrics. supplychaindigital.com

TECHNOLOGY

Sarah Swenson TITLE: GLOBAL SENIOR MANAGER OF SUSTAINABILITY COMPANY: AVERY DENNISON INDUSTRY: APPAREL LOCATION: UNITED STATES My name is Sarah Swenson. I've been in the sustainability side of the apparel and footwear industry for over 10 years now. Currently, I work at Avery Dennison as the Global Senior Manager of Sustainability, and I've held numerous other roles within the sustainability world. I really started engaging in sustainability when I was travelling a lot during my twenties. A lot of the impact for the apparel and supply chain was in places like India and China, and I really wanted to engage in supporting the industry and making better choices, so I jumped into the sustainability field within manufacturers where I thought I could make the most impact.

Sheep Inc. Also partnering with EON, Sheep Inc. - the world’s first carbon-negative fashion brand - is leveraging a bio-based NFC tag that provides each customer with a unique ID to trace and discover their product's supply chain journey. 82

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The knitwear company leverages this technology to communicate with their customers the product’s carbon footprint at each stage of its supply chain journey from raw materials to manufacturing, distribution, and approximate usage.

TECHNOLOGY

“Finding out how well or badly a brand has behaved shouldn’t have to turn into an exploratory mission. It should be instantly visible when you go to buy a garment.” commented Edzard van der Wyck, CEO and Co-Founder of Sheep Inc., on the partnership. “We need to get to the stage where brands give customers the full, nonredacted picture of the journey and the impact behind the things they buy.”

“ We are really keen to reduce our environmental impact” SARAH SWENSON

GLOBAL SENIOR MANAGER OF SUSTAINABILITY AT AVERY DENNISON

Skopes In 2020, Leeds-based brand Skopes coincided with the launch of its first sustainably sourced suit collection - made using plastic bottles - with its use of care labels with QR codes allowing customers to see exactly how and where their suits are made. “We are really keen to reduce our environmental impact and have developed this collection diligently with Lyfcycle over the past 18 months,” commented Nick McGlynn, Head of Buying at Skopes, on the launch. “The aim with Lyfcycle is to create a fully self-sufficient, transparent loop of sustainable and traceable sourcing, production and delivery,” adds McGlynn. Concluding on the future for this technology Swenson says, “the industry has made huge strides, and I think with technology and the availability of tracing and triggers on garments to hold that data, I think it really helps jump the industry forward into providing some actionable data that can be used to showcase a lot of their great efforts that are going unnoticed now, or focus on what they're not doing and that they need to increase, increase what they are doing because it's not working for their consumers or garments aren't getting where they need to go. So some pretty exciting stuff is finally happening in this.” supplychaindigital.com

TOP 10

August 2021

TOP 10

PROCURE-TO-PAY SOLUTIONS PROVIDERS We chart the most innovative and commonly used procure-to-pay providers, delivering greater efficiency and compliance from requisition to invoice payment WRITTEN BY: RHYS THOMAS

rocure-to-pay (P2P) solutions strengthen every step in the procurement process, from requisitions through to invoice payments. Consolidating spend through digital P2P platforms can be transformative, not only in deriving greater efficiency and value, but in ensuring compliance, strengthening supplier collaboration, and surfacing actionable data insights for more strategic decision making. Here we consider some of the most innovative and commonly used P2P solutions providers that underpin the spend of the world’s biggest brands and organisations.

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TOP 10

10 Xelix

HQ: London, UK Positioned as an AI-driven companion for sourcing and finance professionals, Xelix aims to solve common blindspots in modern ERP systems. Its core platform is separated into two distinct modules: protect and insight. Protect minimises risk, identifies hidden threats and prevents incorrect payments that are often missed by ERP systems. Insight provides real-time visibility over ERP data, automates reporting and provides predictive insights to help professionals take greater control over their spend.

09 Medius

HQ: Stockholm, Sweden Medius’ full-suite of eprocurement solutions include P2P, as well as strategic sourcing, data insights and more. Founded in 2001 in Sweden, it now has 400 employees operating from offices across Europe and the US. The company says close to 4,000 customers and more than 500,000 unique users use Medius spend management solutions globally, managing transactions worth more than $160 billion annually. Wax Digital, the cloudbased eprocurement company, was acquired by Medius in 2019, strengthening its end-to-end spend management solutions.

08 Basware

HQ: Espoo, Finland Basware’s tagline is ‘Simplify Operations. Spend Smarter’ - a mantra that underpins its Source-to-Pay (S2P) Ecosystem. The ecosystem encompasses a full suite of P2P solutions, from electronic procurement to accounts payable automation and analytics. Its platform aggregates financial data from all of an organisation’s units, centralising it in one system for greater end-to-end visibility and to empower professionals to make more informed strategic decisions. The company is routinely featured on Gartner’s Magic Quadrant Leader for Procure to Pay suites.

PRM360

HQ: Hyderabad, India One of Acads360 India’s solutions, PRM360 Simplified Procure-to-Pay Suite is a cloud-based platform for streamlining and automating the P2P process. Nitesh Reddy, the founder and CEO of PRM360 Simplified Procure-to-Pay Suite, says the platform is not designed to conduct procurement differently, but to “make it more convenient”. As such, the system’s open-platform architecture means it seamlessly integrates with ERPs and other third-party apps. supplychaindigital.com

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06 Ivalua

HQ: California, USA Ivalua’s Procure-to-Pay solution bridges the gap between procurement and AP teams. Its front end boasts an “intuitive ecommerce expereince” for users, but its true value lies behind the scenes, reducing maverick spend, enhancing visibility in tail spend, and reducing P2P cycle time by improving accuracy and automating invoicing. In a recent case study, Ivalua’s solution helped a leading glass packaging firm derive average savings of 19% over four years.

05 Oracle

HQ: Texas, USA Procure-to-Pay is just one module in Oracle’s comprehensive Oracle Fusion Cloud ERP, which also features strategic sourcing, supplier management, a business network and much more. The module streamlines purchasing by automating purchase orders from approved requisitions, and improves revision management with a complete change history. Other features include invoice matching automation to free professionals from extraneous administrative tasks and accelerate payment processing. supplychaindigital.com

TOP 10

04 GEP

HQ: New Jersey, USA GEP SMART provides a “step change” in P2P, offering users a seamless sourcing experience and improving contract utilisation. Getting to the heart of what procurement professionals need, GEP SMART is a central platform for unifying the orderto-invoice process with the source-to-contract process. A focus on UX and intuitive deployment, GEP SMART gives all stakeholders access to crucial visibility and a shared vision to reach their objectives.

03 Jaggaer

HQ: North Carolina, USA Jaggaer’s ‘Procurement Simplified’ strapline is evident across its platform. Described by the company as a “powerful, modern shopping experience”, its one-stop P2P solution gives professionals full control over their procurement process, alleviating administrative tasks through automation and aligning procurement and AP teams with their suppliers. Jaggaer’s platform is evolving over time, using AI to assist users in every step of the P2P process and provide valuable and actionable insights to professionals.

TOP 10

Coupa

HQ: California, USA

Coupa’s robust P2P solution connects an organisation’s entire transaction journey, from strategic sourcing and requisition to invoicing and payments. But it’s just a small part of the company’s overarching Business Spend Management platform, which also allows organisations to automate contract lifecycle management, manage supply chain design and planning, manage supplier risk, surface actionable insights, and more. New functionality launched this year empowers organisations to source more sustainably, with a suite of new ESG functionality to track supplier compliance, and drive carbon emission targets. Ultimately the platform empowers procurement teams to evolve beyond the bureaucratic backoffice function, instead providing data-driven strategy to forward a business’ objectives.

“Our customers depend on us to help them build the agility and resiliency needed to strategically navigate a challenging but improving economic environment” ROB BERNSHTEYN

CHAIRMAN AND CEO, COUPA

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SAP Ariba

HQ: California, USA SAP Ariba Buying and Invoicing is by many metrics the gold standard for P2P solutions, connecting procurement professionals to the world’s largest B2B network. The platform centralises sourcing for indirect goods and services, automating the entire purchasing lifecycle, from requisitions and POs to receiving goods and payment. Its functionality is wrapped in an intuitive user experience that is “as comfortable as online personal shopping”, with customisable language, currency and dashboard settings to suit every need.

August 2021

Expo 2020 Dubai, the global trade exhibition taking place October 2021 to March 2022, has selected SAP Ariba to digitise procure-to-pay for its more than 25,000 suppliers. Expo 2020 Dubai has already transacted more than AED 1 billion on the platform. SAP was recognised for the fifth consecutive year in the Gartner 2020 Magic Quadrant for Procure-to-Pay Suites.

TOP 10

“The implementation of SAP Ariba solutions has transformed our end-to-end procure-to-pay cycle and helped set new standards of procurement automation for projects of this scale” MOHAMMED ALHASHMI CTO, EXPO 2020 DUBAI

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