Supply chain management is largely concerned with automation. Modern supply chain processes are deeply complicated, meaning that automating more processes is a surefire way to reduce capital and time investment in each link of the chain. According to Finextra blogger Enrico Camerinelli, the next step in automation is financial transactions between supply chain partners and banks, allowing buyers and sellers to interact in a timely manner.
Banks currently dominate
Companies working with global supply chains that feature numerous overseas partners have multiple financial transactions under way on any given day.
|Source: Deutsche Bank|
According to Camerinelli, these transactions have been historically focused on the banks enabling them rather than the companies buying or selling.
He stated that companies are currently limited in the way they can operate these systems, linked as they are to larger bank systems. The main drawback of using a system from a financial provider instead of a usual enterprise software source is, according to Camerinelli, the difficulty of integrating these applications with the rest of a company's infrastructure, typically made up of a few interconnected systems.
Future of finance
Camerinelli believes that a future trajectory involves moving supply chain finance into the same space currently occupied by other vital supply chain software. The rise of supply chain finance applications as vendor-based rather than bank-based would mean greater flexibility, he stated, allowing companies to receive strong, competitive deals from their supply chain software vendors rather than their banks. This would enable greater integration with the rest of supply chain management software and present the ability to select an application that suits a company's unique situation and needs.
While automation and A2A integration may be in the pipeline for supply chain finance, many companies have already saved money by automating other processes. Mid-market firms are especially eager to automate their business processes, according to recent Deloitte research. The global economy's recovery has been slow and cautious thus far, with weakness remaining in areas such as nearly all of Europe. This means that small to medium-sized businesses need to tread carefully.
Automating business processes won acceptance as a money-saving tactic among 46 percent of respondents.
According to the survey, other methods planned to save money will include mild hiring and a focus on new distribution methods such as cloud computing, a method which has become an increasingly popular way to purchase new supply chain management software, including secure file transfer applications with full PCI compliance.