Supply chain complexity causes concern


The supply chain for many organizations has only grown more complex as time has gone by. A recent study conducted by Basware found supply chain executives are growing concerned that the complexity of the systems they manage may be presenting risk to their businesses. This risk can come from a number of factors, including decreased visibility or the simple fact that an increased number of links in a chain means a higher number of objects that can fail.

Supply chain management has been remade by the close and sometimes tangled relationships between buyers and suppliers. The Basware report found that the two sides of the supply chain are treating one another as equals, which is a positive benefit of the tight network of connections springing up. That new closeness has not solved every issue or problem with making payments on time which, especially in low visibility and closed supply chain environments, is a persistent problem. The executives polled estimated that 15 percent of invoices are still paid late.

“Supply chains have become a complex web of commercial interactions and each organization that is part of the network has a role to play in minimizing commercial risk. Finance executives are aware that late or erroneous payments will create problems for their suppliers, yet late payments still exist," said Esa Tihila, Basware's CEO.

The report found that increased openness and visibility between partners is a way to minimize the problems. The executives polled concurred that they could increase their productivity by employing new supply chain management technologies and strategies. Stronger B2B integration options were advocated by 78 percent of U.S. executive surveyed.

Despite the challenges presented by the complex supply chain, it appears it is here to stay. A recent RILA and Auburn University study found that the supply chain's expansion is due to a critical factor in modern business - the rise of ecommerce and the direct to consumer market. This market requires suppliers and distributors to work in new ways and requires advanced strategies. But minimizing it is not an option, as multi-channel commerce is widely seen as a necessary step for retail.

The RILA study found companies coming to grips with becoming channel agnostic and learning to deliver to consumers or to retail outlets using the same infrastructure, losing as little efficiency as possible. New distributed order management systems were suggested as a way to keep complexity from spinning out of control in the face of a multi-channel future.