Although the supply chain industry has garnered plenty of media attention recently, there is still considerable misunderstanding about the true complexity of supply chain issues, the impact on the global economy, and the role technology can play in overcoming challenges. The physical disruptions, like delays caused by threats in the Red Sea, are the issues that generate top-of-mind awareness. But the complete supply chain is more nuanced, with many more factors requiring careful management. In fact, there are three links in the chain, each needing to bear equal weight. The physical, digital and financial all interconnect.
The Physical Supply Chain
The physical supply chain is the most readily recognized aspect of the supply chain. It references the production and movement of goods including modes of travel, from ships crossing oceans to last-mile ground transportation. Manufacturers, suppliers, warehouses, logistics partners, and distribution hubs make up the physical network. Components, raw materials, manufactured goods all move in a carefully orchestrated composition where timing is critical and exact location is essential.
Modern technology focuses on ensuring physical details are defined, verified, and comply with rigorous screenings, specifications, and a series of checks and balances. From purchase orders to bill of materials and custom forms, product details must match, down to the SKU, quantity, and packaging details.
The physical characteristics of supply chain transactions are often the top priorities for organizations. Purchasers want their goods to arrive in their warehouse according to a schedule. Delays in production, in hand-offs between transportation modes, dock strikes, or incomplete customs forms, can get in the way of smooth operations. Managers may be forced to transfer goods between warehouses, juggle schedules, and make last minute changes to shipping routes. Efficiency and cost savings can be sacrificed for the sake of delivery. This is why so many organizations also focus on the digital element as well.
The Digital Side of Managing the Supply Chain
Digital tools support visibility and collaboration between purchasers, manufacturers, suppliers, and shippers, allowing them to share information in real-time, staying on top of scheduled hand-offs, transportation schedules, and compliance mandates.
The digital supply chain is intelligent, resilient, and adaptive. Data drives insights, helping organizations make better use of resources and smart decisions about suppliers, shipping methods and routes. Digital awareness of real-time order status and the ability to forecast disruptions help organizations become preemptive, making adjustments as necessary to prevent delays and eliminate rush charges.
Artificial intelligence and machine learning help with forecasting demand, optimizing inventory levels, and projecting trends. An end-to-end view of the digital supply chain helps support informed decision-making, giving organization leaders AI-driven insights to help them make confident decisions.
The growing emphasis on sustainability and responsible sourcing has also made digital management more critical. Consumers want to verify that the retailers and brands they support have untainted records around treatment of employees, plant operations, and environmental policies and are increasingly demanding products that support a circular economy. Digitalization is a necessity for reporting, analytics, and tracking performance around energy consumption and greenhouse gas emissions.
The need for tracking extends beyond relationships with tier one-suppliers and includes the extended suppliers. Supply chain professionals need to turn to technology to help with traceability.
Recent government mandates, particularly the EU Digital Product Passport (DPP) have made digital tracking of supplier activities mandatory. The DPP mandate will go into effect in a phased approach, between 2026 and 2030. It will apply to a wide range of product categories, including textiles, furniture, and chemicals. The passport will likely be in the form of a QR code linking to data about the product’s origins, material composition, sustainability, recyclability and more.
The Financial Supply Chain
This third link in the supply chain, the financial element, is not always recognized but is equally as important as the first two. The financial supply chain ensures the health of purchasers and suppliers alike. Cashflow is optimized so capital is where it needs to be, when it is needed the most. It can leverage the financial strength of the purchaser to build stability and sustainability throughout the supply chain.
Technology plays a critical role in connecting the various elements that will yield financial health for all players. It begins with Procure-to-Pay functionality that streamlines and speeds processes by automating the tedious checks and balances that ensure purchase orders, shipments, receipts, and invoices all match. When routine transactions can be verified automatically, users can spend more time on the exceptions and strategic initiatives such as relationship building with suppliers.
One way that purchasers can build relationships with suppliers is through supply chain financing. Supply chain financing enables banks to bridge gaps in cash flow for suppliers. Months can lapse between when a supplier needs to buy materials and when the invoice will be paid, creating a stifling burden to suppliers, small to mid-sized businesses, or start-ups in emerging economies. Supply chain finance changes this. With a supply chain ecosystem, participating banks have visibility to orders and transactions. This gives the bank reassurances allowing them to offer greater funding opportunities to suppliers.
Supply Chain Finance is becoming increasingly important as companies and their extended supply chain partners face ongoing global disruptions and new sustainability mandates. Building a resilient ecosystem and funding Environmental, Social, and Governance (ESG) goals requires capital. Purchasers and suppliers can both benefit from having access to working capital.
The Wrap Up
The physical, digital, and financial aspects each play a critical role in a successful, resilient and sustainable supply chain. Materials and finished goods must meet physical requirements, whether shipping across town, cross-country, or continents away. The digital supply chain tracks the movement through data, adding the ability to analyze, notice trends, anticipate needs, and predict red flag moments so intervention can take place. And, the financial supply chain helps leverage cash flow, keeping the extended supply chain moving with maximum efficiency.
Heidi Benko is VP Product Marketing and Strategy at Infor.
The Supply Chain is as Strong as Its Three Links: Physical, Digital, and Financial
Although the supply chain industry has garnered plenty of media attention recently, there is still considerable misunderstanding about the true complexity of supply chain issues, the impact on the global economy, and the role technology can play in overcoming challenges. The physical disruptions, like delays caused by threats in the Red Sea, are the issues that generate top-of-mind awareness. But the complete supply chain is more nuanced, with many more factors requiring careful management. In fact, there are three links in the chain, each needing to bear equal weight. The physical, digital and financial all interconnect.
The Physical Supply Chain
The physical supply chain is the most readily recognized aspect of the supply chain. It references the production and movement of goods including modes of travel, from ships crossing oceans to last-mile ground transportation. Manufacturers, suppliers, warehouses, logistics partners, and distribution hubs make up the physical network. Components, raw materials, manufactured goods all move in a carefully orchestrated composition where timing is critical and exact location is essential.
Modern technology focuses on ensuring physical details are defined, verified, and comply with rigorous screenings, specifications, and a series of checks and balances. From purchase orders to bill of materials and custom forms, product details must match, down to the SKU, quantity, and packaging details.
The physical characteristics of supply chain transactions are often the top priorities for organizations. Purchasers want their goods to arrive in their warehouse according to a schedule. Delays in production, in hand-offs between transportation modes, dock strikes, or incomplete customs forms, can get in the way of smooth operations. Managers may be forced to transfer goods between warehouses, juggle schedules, and make last minute changes to shipping routes. Efficiency and cost savings can be sacrificed for the sake of delivery. This is why so many organizations also focus on the digital element as well.
The Digital Side of Managing the Supply Chain
Digital tools support visibility and collaboration between purchasers, manufacturers, suppliers, and shippers, allowing them to share information in real-time, staying on top of scheduled hand-offs, transportation schedules, and compliance mandates.
The digital supply chain is intelligent, resilient, and adaptive. Data drives insights, helping organizations make better use of resources and smart decisions about suppliers, shipping methods and routes. Digital awareness of real-time order status and the ability to forecast disruptions help organizations become preemptive, making adjustments as necessary to prevent delays and eliminate rush charges.
Artificial intelligence and machine learning help with forecasting demand, optimizing inventory levels, and projecting trends. An end-to-end view of the digital supply chain helps support informed decision-making, giving organization leaders AI-driven insights to help them make confident decisions.
The growing emphasis on sustainability and responsible sourcing has also made digital management more critical. Consumers want to verify that the retailers and brands they support have untainted records around treatment of employees, plant operations, and environmental policies and are increasingly demanding products that support a circular economy. Digitalization is a necessity for reporting, analytics, and tracking performance around energy consumption and greenhouse gas emissions.
The need for tracking extends beyond relationships with tier one-suppliers and includes the extended suppliers. Supply chain professionals need to turn to technology to help with traceability.
Recent government mandates, particularly the EU Digital Product Passport (DPP) have made digital tracking of supplier activities mandatory. The DPP mandate will go into effect in a phased approach, between 2026 and 2030. It will apply to a wide range of product categories, including textiles, furniture, and chemicals. The passport will likely be in the form of a QR code linking to data about the product’s origins, material composition, sustainability, recyclability and more.
The Financial Supply Chain
This third link in the supply chain, the financial element, is not always recognized but is equally as important as the first two. The financial supply chain ensures the health of purchasers and suppliers alike. Cashflow is optimized so capital is where it needs to be, when it is needed the most. It can leverage the financial strength of the purchaser to build stability and sustainability throughout the supply chain.
Technology plays a critical role in connecting the various elements that will yield financial health for all players. It begins with Procure-to-Pay functionality that streamlines and speeds processes by automating the tedious checks and balances that ensure purchase orders, shipments, receipts, and invoices all match. When routine transactions can be verified automatically, users can spend more time on the exceptions and strategic initiatives such as relationship building with suppliers.
One way that purchasers can build relationships with suppliers is through supply chain financing. Supply chain financing enables banks to bridge gaps in cash flow for suppliers. Months can lapse between when a supplier needs to buy materials and when the invoice will be paid, creating a stifling burden to suppliers, small to mid-sized businesses, or start-ups in emerging economies. Supply chain finance changes this. With a supply chain ecosystem, participating banks have visibility to orders and transactions. This gives the bank reassurances allowing them to offer greater funding opportunities to suppliers.
Supply Chain Finance is becoming increasingly important as companies and their extended supply chain partners face ongoing global disruptions and new sustainability mandates. Building a resilient ecosystem and funding Environmental, Social, and Governance (ESG) goals requires capital. Purchasers and suppliers can both benefit from having access to working capital.
The Wrap Up
The physical, digital, and financial aspects each play a critical role in a successful, resilient and sustainable supply chain. Materials and finished goods must meet physical requirements, whether shipping across town, cross-country, or continents away. The digital supply chain tracks the movement through data, adding the ability to analyze, notice trends, anticipate needs, and predict red flag moments so intervention can take place. And, the financial supply chain helps leverage cash flow, keeping the extended supply chain moving with maximum efficiency.
Heidi Benko is VP Product Marketing and Strategy at Infor.
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