How Adaptive Case Management Can Relieve Your Supply Chain Stress

By Deb Miller (@DebsG360) Apr 4, 2011

Are you stressed out? Companies that compete on the basis of their supply chain are definitely feeling the stress right now. You only have to look at recent headlines of the tragic disasters in Japan and the unrest in the Middle East to understand the disruptive pressures being placed on lean supply chains. It makes sense to turn to technology to help relieve the pressure and supply chain leaders are doing just that. I think that case management — a technology that has already demonstrated its usefulness in the financial services sector — has tremendous potential as a new form of stress relief for the supply chain sector. In this article in my adaptive case management series, I share some examples of how business process and case management are being applied to improve the financial flows over the supply chain.

Changing the Economics of Supply Management

The previous decade saw improvements in supply management using tools such as EDI (Electronic Document Interchange), ERP and other packaged applications. For the sake of full disclosure, I led an EDI software and network services business at the time and was proud of the business benefit delivered to the customer. However, these tools do NOT significantly help where documents and decision making must span system and organizational silos, and straight-through processing is not possible or practical. In those circumstances, we see untamed processes form to fill gaps along the primary end-to-end business processes and act as bridges between the silos. These untamed process areas are a perfect target for applying both process and case management to focus on delivering value to the business.

For example, most invoices in the supply chain ecosystem start life in order management applications and end up in accounts payable systems. Yet many invoices still exist as paper in between, as do critical supporting documents such as supplier SLAs and Trade Promotion deal sheets. Many of the tasks and decisions along the way are still dependent upon human beings. Companies have negotiated favorable terms, trade promotions and prompt payment discounts from their vendors, but fail to give the worker necessary guidance to match all this information to invoices and prioritize and process the invoices within the designated time period to qualify for discounts.

Companies such as CIBA Vision have applied process and case management technology to improve their AP invoice processing, eliminating errors that cause delays and unnecessary adjustments, such as goods being received for which no invoice has been generated, or vice versa. This shortened turnaround from 5 days to less than 24 hours and supports self-service for inquiry requests. With this technology, companies can let cross-system automation take care of the majority of the situations and provide guardrails for knowledge workers to handle the exceptions, avoiding situations where the human involved in the process needs to track down the information they need to make a decision, delaying the process and possibly missing time-sensitive vendor discount terms.

While you might not be able to stop your supply disruptions with case management, you can better manage your supply environment to take cost out without affecting order flow. Case management helps you to be organizationally responsive. First, the ability to see the problem is important, and then it is necessary to route the problem to get it addressed via a compliant process that includes human task and workflow progress. This can have a significant impact on improving your cash flow. Estimates from a U.S. Institute of Management and Administration Survey indicate that, on average, 10% of invoices are processed too late to be paid within discounting terms. Something to think about the next time you’re asked to take cost out of an already lean supply chain.

Resolving Customer Order Disputes

In supply chain circles, achieving the “perfect order,” the right product delivered in full, on time, every time, is considered Nirvana. Gartner’s annual look at some of the world’s best supply chains found that companies that rank in its Top 25, such Johnson & Johnson, Nike, and Publix, carry less inventory and have shorter cash-to-cash cycle times. How do companies achieve this level of performance? Certainly they are continuously improving their supply chain processes to achieve the “perfect order.” However, effective exception handling is one of the most important competencies a company can gain, especially to make significant advances in demand-driven performance.