Creating Net Efficiency in the Supply Chain Through a Supplier Experience Lens
Table of Contents
The Supplier Experience Live 2023 event was closed by Costas Xyloyiannis, CEO of HICX, who provided his view on where the supplier experience journey will take us next, the impact that technology will have, and why its impact will need out-of-the-box thinking in order to create net efficiency gains.
This article will cover:
- Why technology is creating inefficiency within the supply chain
- What does “net efficiency” in the supply chain mean?
- Why are current solutions not working?
- How can net efficiency in the supply chain be created?
- 5 key takeaways to increase net efficiency in the supply chain
Why technology is creating inefficiency within the supply chain
The current approach to suppliers within the supply chain is marked by a significant data problem and redundancy in data entry in a plethora of systems.
Opening the session, Costas comments, “We can all admit that there is a massive data problem or data entry problem. We’ve heard now numerous times about the best-of-bread multiple systems.”
“This means that we are going into a lot of systems, over and over again, and suppliers are having to complete redundant data entry,” he adds.
He points out that this impacts everyone, whether you are a customer, supplier, competitor or a partner, as we are all suppliers at some point.
By looking at the reality of today’s technological landscape through the lens of the supplier, the issues become obvious.
What does “net efficiency in the supply chain” mean
The origins of this concept came in the early days of HICX. As Costas describes, “When we set up HICX, many moons ago, we came up with this idea of, ‘wouldn’t it be great to create net efficiency in the supply chain?’”
In other words, removing wasted work within the supply chain. The idea was simple in scope, but complex to achieve at the same time. He continues, “Historically, in order to create efficiency within our organization, we have to create inefficiency in another organization.”
He explains how, in the past, when organizations were dealing with challenges such as inflation, disruptive macro events, foreign exchange fluctuations, and so on, they would run programs pushing that to their suppliers to absorb some of the cost. In other words, you created no efficiency in the supply chain and instead just moved the cost of the inefficiency to where it will be absorbed.
Instead, with the concept of ‘net efficiency in the supply chain,’ you actually remove the inefficiency. Understanding that inefficiency comes from our complex technological landscape, Costas explains that what customers are asking for, “is a system that allows the supplier to enter data once and for that data to spread across all the different digital solutions that they need.”
Why the current approach isn’t working
Costas explains, it is not for the lack of trying that we still don’t have a solution for this problem. Rather, it is because the solutions we have tried (and are currently using today) have failed to produce the right results.
“What we have done is push the burden to the supplier. Frankly, that’s not even trying at all, and that’s been the most common method. Next, and because we all hate this idea of suppliers doing things multiple times, we thought ‘Well wouldn’t it be great to create a singular network where every supplier would go in and just do it there.’”
The problem with a single network solution is that ‘supply chain management’ is just too vast an area for any one company to be able to cover all use-cases.
Finally, Costas continues, another solution, or rather a variation of the second, which incorporates the trend of bringing AI into the single network solution. In this case, we scrape together the information we need, so the supplier does not have to add it themselves, nor keep it up to date.
The challenge with option three is that you build a solution that relies on information within the public domain, which gives no guarantees on whether the data is truthful or accurate, not to mention that not all information is available publicly.
What will be the future for creating net efficiency in the supply chain
Instead, Costas sees the future of trade and commerce as a set of interoperable networks which cater to different aspects of the commerce process.
“We have to accept it’s not going to be one network. That is the reality. The future is going to be a set of interoperable networks around e-commerce and supply chain, which are going to cater to different parts of the process,” he explains.
He states that the real challenge creating the inefficiency is the requirement to uniquely identify a legal entity across any digital service.
During the session, Costas shares an analogy with the phone number. “Think about life before the phone number,” he says. “The phone number transformed everything because it was a high precision identifier for a consumer. In the B2B space we don’t have anything yet which has solved this.”
Introducing IUBN – Internationally Unique Business Number
In the same vein, and inspired by the success of the International Bank Account Number (IBAN) in the financial sector, Costas reveals his vision for the IUBN standard, the Internationally Unique Business Number.
IUBN, he says, “will seek to create a standardized, global identifier for legal entities.”
Unlike proprietary identification numbers, the IUBN will draw its strength from using the process of incorporation and establishing the registrar as the ultimate source of truth for a legal entity.
As Costas points out, “The IUBN is not a new identifier; rather, it is a standardized representation of existing identifiers, comprising a two-digit country ISO code, a checksum, and the entity’s registration number from the registrar.” By adopting a standardized approach similar to IBAN, IUBN seeks to revolutionize the identification process in the B2B space, providing an open, global, and democratized solution.
Practically, IUBN enables seamless synchronization of data across disparate systems. In the session, Costas illustrates how a supplier, armed with an IUBN, can enter data into one system, triggering a publish event to a listening hub. Other systems, tuned to listen for such events can then autonomously synchronize the updated information, thereby realizing the long-envisioned goal of “one system, one time, everywhere.”
5 key takeaways to increase net efficiency in the supply chain
As the Supplier Experience event highlighted throughout, the future of the procurement function lies in embracing a supplier-centric perspective – and addressing this root challenge of data redundancy will be a massive part of that.
Costas concludes the event by sharing 5 key things to pay attention to:
- It starts with a simple standard to solve the ‘identification’ issue: The IUBN emerges as a powerful solution, offering a standardized, global identifier that facilitates interoperability across diverse digital services.
- If we agree on a global standard, it very quickly solves many challenges.
- The identifier needs to be open and free. The IUBN network already exists – it’s implicit.
- These numbers already exist – again, it’s implicit – they are created when a company is registered.
- Focusing on ‘Supplier Experience’ means looking for solutions to a problem, not just technology. In doing so, organizations can pave the way for a more efficient, interconnected, and future-ready supply chain.
