Vendor Viewpoint

Where Should the Finance Function Focus Their Digital Transformation Efforts?

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22 February 2023

Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine

As 2023 officially begins, CFOs that are facing economic challenges are maintaining their cost-cutting efforts as a potential recession looms. Yet, this does not imply that efforts like digital transformation have lost priority because CFOs still see it as strategically significant for their companies. Regardless of what is happening, it must be done and is still a top priority. However, leaders in finance are still having trouble getting their digital transformation initiatives forward. Some may not necessarily know how to move forward in their digital transformation journey hence why DigitalCFO Asia decided to speak with Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine to get his perspective on the topic. 

Finance Function’s Present Digital Transformation Efforts

“The pandemic has taught us that digitalization is key for companies to stay competitive and thrive,” says Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine.

These sentiments seem to be echoed still as the finance function contemplates what lies ahead in their digital transformation efforts. BlackLine’s latest survey with Censuswide showed that 51% of C-suite executives and finance and accounting (F&A) professionals in Singapore indicated that they will invest more in digital transformation initiatives this year. 49% of them are considering implementing or scaling automation solutions to increase and optimize working capital in 2023, proving that digital transformation is still key in the corporate agenda.

Challenges That Are Holding Finance Teams Back In Their Digital Transformation Journey

The present economic climate has inevitably presented many challenges across various functions and industries. BlackLine’s survey with Censuswide highlighted the three biggest obstacles C-suite and F&A respondents in Singapore highlighted they will face in the coming year: 

  • Reduced budget for their department
  • Increasing regulations and scrutiny
  • Being able to provide accurate data quickly enough to help the organization respond to market changes

It’s understandable when companies hold back on making new changes amid ongoing financial challenges such as crippling supply chains and unprecedented high interest rates. Organizations would choose to prioritize understanding their cash flow in real time and optimizing their operations to minimize the impact of external disruptions. Moreover, the F&A profession is struggling with an unprecedented labor shortage like many other functions, forcing them to look at solutions which aren’t dependent on staff expansion. 

“This is also why it’s critical to replace any labor-intensive processes such as conventional Accounts Receivable (AR) processes with automated solutions to free up resources which can be allocated to strategic decision-making.”

Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine

Companies which are still hesitant can weigh the benefits and costs with a simple question: How much time and money can we save if we automate a certain process? A follow-up to that would be to weigh the benefits and evaluate what would be best for the organization at that time. 

Key Priorities That Organizations Hope To Achieve With Digital Transformation

With the ongoing shortage of talent in F&A functions, organizations are looking at how they can use digital technologies to improve operational efficiencies, and manage the workload of existing employees. With legacy technology and processes, F&A professionals may spend the best part of their work week dealing with repetitive transactional tasks. Not only is this inefficient, F&A professionals are also unlikely to feel challenged, valued or fulfilled in their roles. Digital technologies such as intelligent automation take over the repetitive and tedious work, allowing F&A professionals to focus their attention on more strategic tasks.

“Ensuring compliance is another key priority, especially as businesses manage data from across different systems, business units and stakeholders, amid increasing regulations and scrutiny,” emphasized Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine.

Traditional compliance processes can typically be quite manual, fragmented and siloed, which is why organizations are turning to integrated, cloud-based solutions like BlackLine to help with compliance management.

Southeast Asia’s leading on-demand multi-service platform, Gojek, is one such example. The company deals with massive amounts of data – related to logistics, bookings, transactions and financial movements – from various sources. With the high data volume, Gojek needed a tool that would help them quickly, accurately and effectively reconcile payment data across multiple formats to match transactions with bank statements. With BlackLine, Gojek was able to generate critical reports and meet the highest governance standards through their compliance across finance and accounting operations. 

Steps CFOs Should Take To Either Begin Or Enhance Their Digital Transformation Efforts

The digital transformation process looks different for each organization, depending on their industry, company size and scale, existing technological maturity and so on. However, what is common among those who have had success in introducing digital initiatives in their organizations, is having a clear understanding of what the organization hopes to achieve with digital transformation. 

“As a first step, CFOs will need to determine the organization’s objectives, and what success would look like for their organization,” says Mike Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine.

They can then set goals by benchmarking their organization against others of similar size and scale, which have already undergone transformation. 

CFOs will also need to get CIOs closely involved in the digital transformation initiative. According to Gartner, success in digital investments is highly dependent on strong CFO-CIO partnerships. Just as how financial operations management is not solely the CFO’s responsibility, managing data too is not the duty of the CIO alone. These are shared responsibilities, which would require CFOs and CIOs to speak the same language, to have a productive discussion on how to turn investments on digital technologies into real digital capabilities for the organization.

CFOs In Ensuring That Digital Transformation Efforts Cause Minimal Disruption To Their Workflow

CFOs should learn from others who have had experience implementing a finance transformation program, and adopt any learnings to minimize disruption to their existing workflows. Here are some tips:

  • Plan ahead, and set clear, quantifiable goals as a benchmark for progress
  • Lean on the expertise of reputable, experienced software providers, rather than dedicating significant resources to building, maintaining and upgrading a solution from scratch
  • Equip teams with the necessary tools and skill sets to run a digitalised finance function 

From Hindsight to Insight: How Finance Teams Are Relying on Predictive, Not Historical Data to Deliver Business Value

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17 January 2023

Joe DosSantos, Chief Data and Analytics Officer at Qlik

Finance teams have spearheaded enterprise analytics’ evolution since its inception, initially focusing on reactive and descriptive analytics relating to financial performance, inventory management, and treasury holdings. Today, we are looking at more predictive and prescriptive analytics supporting risk, credit, and financial business modelling. Often called Active Intelligence, finance teams are looking to use real-time, up-to-date data to inform decision-making in the business moment.  

Strengthened by the progress in artificial intelligence (AI) and digitisation, data will only continue to grow and evolve. The new working practices it enables are seen across many organisations today and support cross-function collaboration for richer insights. Finance teams, for example, are increasingly working with marketing to understand early-stage buying signals that could reduce the cost of acquisition and grow the lifetime value of customers.   

The role of finance within the business is transforming. Financial leaders are now business partners that are not just informing but instigating the individual moments and micro-decisions that help transform the business in real-time. 

However, this transformation necessitates changes to mindsets and working practices. Chief Financial Officers (CFOs) and financial leaders must quickly adopt and instil an active approach to data within their teams so that they are ready to seize on the growing data opportunity. 

Consolidating Data To Deliver Better Experiences

In today’s evolving landscape, the traditional month-end analysis to identify trends or incidents that could affect the profit and loss statement would be redundant. As incidents occur, organisations need to be confident in making real-time, data-informed decisions.  

With an end-to-end data analytics platform, finance teams can combine multiple, complex data sources to analyse financial performance, develop forecasts, and run flexible economic and financial simulations. Bringing together data from various sources with the continuous integration of data across an organisation provides complete, accurate, and up-to-date datasets.  

Unifying data has been tricky, particularly data from Systems Applications and Products in data processing (SAP) and other Enterprise Resource Planning (ERP) software solutions central to most organisations’ operations. An active data analytics platform solves that problem by unifying siloed data and delivering complete and accurate financial analytics insight. As a result, CFOs can now dig deeper into the data and explore expense, procurement, and contract data to discover the actual cost of doing business and identify new ways to reduce costs and increase profitability.  

CFOs can also compare forecasting with actuals in real-time for ongoing trend analysis and to accelerate closing at period-end. For example, the finance department at Bajaj Auto, a leading multinational automotive manufacturer, has extensively performed cost analyses and assessed how individual products perform with an active data approach. In addition, by being more agile, the finance team can alert lines of business when action needs to be taken rather than reporting on an event after the fact. 

The Power Of Machine Learning For Sales Forecasting 

Machine learning (ML) helps augment many data analytics tools to perform the abovementioned capabilities, thanks to the cloud and its limitless computing capability. McKinsey finds that 20% of C-level executives now use machine learning as a core part of their business.  

ML technology does not require heavy investment in specialist expertise. Simple to use, code-free solutions can integrate ML technology into predictive models by automating model generation and testing business scenarios by efficiently connecting data and identifying key drivers. The models are trained on potentially large data sets and learn from patterns often indiscernible by humans. But its real value lies in its ability to provide detailed insight into key drivers and inform more accurate sales forecasting.  

Set Up Alerts For Efficient Bill Payments

With an end-to-end data analytics pipeline, CFOs can set up alerts that spot outliers and anomalies in data, notifying in real-time to take action. Business users can also create self-service alerts directly, which can then be centrally configured and managed for more widespread distribution across the organisation. These alerts in the digital world can also alter the customer or partner’s behaviour and habits by promoting products based on buyer preferences. 

Alerting can help reduce bill payment delays to make billing and accounts more efficient. CFOs and their teams can set up thresholds and alerts for in-the-moment monitoring of spend to avoid budget derailing and compel action.  

The Time Is Now – Act At The Business Moment

Using the same mindset with unifying data, finance teams can no longer work in silos away from the wider business. As CFOs have a firm place at the boardroom table, they must make good use of the business data to improve the bottom line. Accurate, relevant financial reporting reflects the business at the moment. It demands a far more agile and active relationship with data – delivered by AI-driven analytics.  

Gone are the days of static quarterly and yearly forecasts. Instead, businesses must make decisions based on continuous real-time insights from enterprise analytics platforms that use complete data for far more accurate financial analytics insights.  

Becoming active with data means becoming engaged in today’s fast-paced digital economy. This is where real change comes. So put the finance team at the heart of success now and in the future.  

Two Paths in the fast road to Digital Transformation: which way to go?

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By Jim Close, Regional Vice President of Enterprise at Kofax | 20 December 2022

Jim Close

Regional Vice President of Enterprise at Kofax

Skilled labour shortages. Compliance requirements. Economic Downturn. Supply chain issues. It’s been a bumpy road for organisations, filled with unexpected twists and turns and one obstacle after another.

Successful navigation of this treacherous landscape requires a digital-first mindset, and many leading companies have turned to automation to tackle these complex business processes. And it’s a smart choice. Automation simplifies many of the complicated challenges like compliance requirements and helps to overcome labour shortages.

Many companies are now finding themselves at a fork in the road on the digital transformation path. Multinational companies have spent the last several years accumulating point solutions for automation to support business operations as the need has arisen. Slowly but surely, this has resulted in fragmented and siloed automation projects.

Unfortunately, a piecemeal approach simply won’t cut it anymore. Challenges such as technical debt, issues with scalability persist as a result of these approaches, add in that the qualified labour pool required to manage and scale myriad solutions gets smaller by the day, and it’s easy to see why many businesses are finding themselves at a crossroads.

Organisations should change their current course and move to an intelligent automation platform. Thanks to a more efficient approach to automation reducing complexity, maintenance and overhead, organisations can benefit from doing more with fewer resources.

Most organisations believe a single-vendor approach to automation will help resolve challenges. Uniting under a centralized intelligent automation platform brings together previously fragmented projects and makes it possible to address all the company’s needs across the spectrum of digital imperatives. This path is the equivalent of a short cut, empowering organizations to achieve end-to-end automation and digitally enabled workflows faster.

Rather than making things more complicated and adding to the list of challenges to overcome, an integrated intelligent automation platform standardises digital transformation efforts and delivers a long list of benefits:

  • Cost savings: A central system is easier and less expensive to maintain than multiple point solutions. Organisations benefit from a reduced reliance on IT and a lower technical debt.
  • Scalability: Every organisation has unique needs depending on where it is in its digital transformation journey. An integrated platform with on-demand capacity supports teams where they are today and grows with it tomorrow.
  • Agility: As new challenges arise and as business processes change, a centralised platform makes it simple to adapt. An intuitive platform allows citizen developers to contribute to automation efforts, so businesses can respond quickly to changing demands.
  • Simplicity: One platform puts an end to automation silos. There’s only one solution to manage and maintain, and everything can be implemented with a minimal required skill set. An integrated platform also lightens the workload when it comes to solving large business and operational challenges.
  • Collaboration: Seamless collaboration between human and digital workers makes it easy to execute and automate workflows across high-value business processes. Employee productivity increases, and workers can spend more time on value-added, strategic work and less time on manual, error-prone tasks.

A Sneak Peak Down the Path of a Centralised Platform

Here are four components to achieving end-to-end automation for organisations getting started.

  1. Document intelligence: Technologies such as cognitive capture, machine learning and natural language processing work together to process, classify and analyse structured and unstructured data in incoming documents (a document could be an email, paper, EDI invoice, PDF, mobile app, etc.—think omni-channel, i.e., ANYTHING received by a company). Invoices, contracts, sales orders and more are routed to the right people and departments. Advanced analytics unlock the true value in the information coming in, so decisions are based on actionable insight.
  2. Process orchestration: The ability to add and manage a digital workforce on demand makes scaling automation easier than ever. Process orchestration enables businesses to monitor the time, resources and costs in different business workflows, so they can see where improvements need to be made and act accordingly.
  3. Connected systems: Integrations with current technology was ranked as one of the top features business line managers look for in an automation platform. The ability to bring together all of the business systems—enterprise applications, legacy systems, chatbots, mobile—across internal and external business processes reduces complexity and saves time. Look for a platform that has an open architecture and comes equipped with prebuilt adapters that can connect to core systems. 
  4. Low-code platform: It should be no surprise that “easy to learn” and “easy to use” were two other top platform features business line managers seek, with more than 70 percent of respondents listing both qualities as requirements for helping them do their jobs more efficiently. A low-code platform lets citizen developers (i.e., the people who do the work, not IT developers) put their business knowledge to work on automation initiatives with minimal training, while still providing more advanced features for skilled coders and developers. Everyone can play a role in getting companies further toward the clearing in the woods—enterprise-wide, end-to-end automation.

Instead of stumbling down the same path of siloed, disparate projects, organisations would do well to achieve true digital workflow transformation with a centralised intelligent automation platform so they can work like tomorrow, today. The choice is simple.  

Trust the Hype – How E-services such as E-invoicing Can Build Resilience and Streamline Operations for Your Business

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Matthew Thomson,

Senior Vice President, Asia Pacific & Japan at Kofax 

When it comes to digitalization today, many businesses are caught up in the race to integrate technology into their daily operations and make sure their company will withstand these difficult times. In fact, according to the Kofax 2022 Intelligent Automation Benchmark Study, 89% of worldwide executives believe that digitally transformed businesses have a competitive edge, and 90% of global executives believe that automating activities post-COVID will ensure company continuity. 

Because of this, companies aiming to increase their resilience should consider expediting their technological development by considering e-services like e-invoicing. These services have four main benefits: automatic updates, accessibility from anywhere, speed and cost reductions, and scalability. DigitalCFO Asia spoke with Matthew Thomson, Senior Vice President, Asia Pacific & Japan at Kofax to learn more about how organisations can use automation to gain resiliency in their business. 

While most Companies in Singapore and Asia are already digitising their invoicing processes, what are the major challenges amidst this shift? 

Throughout the Asia Pacific, we see a very volatile economic landscape. According to Matthew, the world is in a very unsettled space right now.  We’re seeing interest rates rise, we’re seeing the cost-of-living increase, which is impacting all of us and we’re seeing fuel prices rise. Thus, what was really intended to be conveyed was that both the problems and costs associated with conducting business are rising. Digital transactions and transformation have already occurred and are almost the new norm. When we think about E-invoicing, many financial institutions, in particular, are talking about large increases in digital transactions per year. 

Every year, Kofax does an intelligent automation study, and in 2022, they found that: 

  • 85% of C-suites said that they would focus their intelligent automation on accounts payable automation 
  • 82% said invoice automation 
  • 84% said transaction processing  
  • 83% said bank statement processing  

All of this ties in again with invoicing. However, these issues affect not only the public sector but also the business sector and how we work with suppliers. One of the difficulties people are trying to solve is the amount of paperwork produced by the invoicing operations because it has historically been a very labor-intensive process. Another challenge is reducing the number of duplicate payments, which greatly impacts business, suppliers, and clients. Unfortunately, whenever we involve humans in a process, we run the risk of making mistakes. We may not all make mistakes, but someone might along the way.  

Automation and Intelligent Automation 

It can enhance productivity across a firm since you can use your resources more effectively and there is less chance of human error. First, it drives faster response times because the procedures are more water created. When you’re able to monitor control and standardising processes, you’re actually able to increase your compliance – according to Matthew. The identification of problems is another important consideration. Process and automation may enable you to spot issues and difficulties earlier. 

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Photo by cottonbro studio on Pexels.com

Being able to automate and make these procedures seamless can actually promote greater customer engagement and faster response times, which has a flow-on impact. When you look at dealing with customers, it typically includes a lot of processes and time, and this can be time-consuming. If we’re able to get better and faster data, you can make more accurate decisions and more accurate decisions can again improve customer retention the customer focus. it also drives cross-sell and upsell opportunities. So, with this automation you can improve your customer engagement and your customers. 

Operations are key and it’s often in a very critical part of any company. However, because there are so many procedures involved in these activities, the operations team will benefit if you can look to make them smooth. They can function more efficiently. They can direct and concentrate on greater invention. 

Promoting Resiliency 

“It’s being able to cope with change and cope with unexpected change,” quoted Matthew. We all bear several scars, as the pandemic made clear. All of us had to adjust to the sudden change. And you need to be adaptable to deal with change in custom. They must recognize and automate your duties and procedures in order to respond quickly and be nimble. 90% of C-suites believed that automating workflows only during post-covid, can already ensure business continuity. 89% of C-suites also believed that digitally transformed companies have a competitive advantage. 

Accounts Payable Teams in Southeast Asia should Pioneer with Automation against Fraud

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Greg Crowl | 11 November 2022

Although fraud is not a new phenomenon, organizations will need to be equipped to identify and prevent fraud.

Every organization’s primary aim is to be profitable – and no fault should be seen in that. But what they want to stray away is the dirty side of money. That would be the “F” word in the business world: fraud.  

Although fraud is not a new phenomenon, organizations will need to be equipped to identify and prevent fraud. In fact, the pendulum seems to be swinging the other way, with the scales tipping further in the favor of fraudsters. Financial criminals have been sharpening their skills and cunningly preying on unsecured companies as well as their employees, although organizations have been improving their fraud defense. 

The prolonged pandemic hasn’t helped the situation. In PwC’s Global Economic Crime and Fraud Survey 2020, 42 percent of Singapore-based organizations were have fallen victim to fraud over 24 months, of which 23 percent suffered a cumulative loss of more than US 50 million to fraud, higher than the global level at 13 percent. Singapore’s prominent positioning as the financial hub of Southeast Asia is likely a key driver of the growing reported economic crime rate.

The common type of frauds that are rising in ASEAN markets, among an array of violations, are asset misappropriations, misleading financial statements, and resume fraud. These frequent events of frauds are happening due to poor fraud awareness and minimal standards of digital literacy. Statistics from CyberSource showed that fraud cost Southeast Asia at least 1.6 percent of digital revenue, with Indonesia leading at 3.2 percent.

No company wants to be duped by fraudsters, but even trillion-dollar companies do falter. Amazon, the benchmark of running a successful business, was defrauded of US 19 million. Facebook and Google were also scammed of US 100 million by forged invoices sent through phishing email scams. 

Whether it’s a small or medium enterprise (SME) or a multinational corporation (MNC), fraudsters are targeting them, which means defenses in an organization are required to be current.  For instance, financial institutions have to comply with complex and ever-changing regulations set by the government. Add in the ongoing customer life-cycle transformation, and protecting the business from fraudulent activity seems more challenging than ever. 

Fortunately, there are steps organizations can take to fight back against fraud and meet “know your customer” (KYC) requirements. Fraud detection and prevention has, for the longest time, been based on a three-pronged approach comprised of people, processes and technology. While all three elements are still essential, the increased complexity of fraud scams demands a greater reliance on the technology portion. People still play an important role, but it’s become increasingly difficult for the human eye to spot fraud given how sophisticated scams have become. Processes aren’t going to disappear either, but their key role is to connect people and technology in a way that makes them stronger together than when used alone. 

Unlike people, technology has evolved—so it can do a better job of keeping up with the advances in fraudulent activity. New techniques are available, making it the best choice to lead the charge. But where do you start?

Accounts Payable: Your Best Defense against Fraud

Accounts Payable (AP) staff relying on old tricks are defenseless against more complex fraud schemes. Intelligent AP automation is a modern weapon financial organization can use to keep fraud at bay. AP automation transforms accounts payable, eliminating the errors associated with manual work and enabling AP staff to “better support compliance and risk management teams in enforcing policies, identifying potential red flags, and escalating issues internally.” AP automation “reduces the risk of fraud and increases compliance by employing standards for handling expectations and workflows.”

Many organizations are beginning to see the benefit of investing in technologies and other resources to fight fraud, with 40 percent of respondents to PwC’s global survey stating they plan to increase their spend on fraud prevention over the next two years. The report also notes this is a smart choice since “there is a clear link between fraud prevention investments made upfront and reduced costs when a fraud strikes.” Additionally, companies using tools such as artificial intelligence are seeing value in the battle against fraud when the tools are properly implemented. For organizations considering an AP automation solution, it’s important to understand what makes this weapon valuable and how it can help fight fraud. 

Asia Pacific financial institutions are prepared to invest millions in fraud prevention according to a GBG report titled “Future-proofing Fraud Prevention in Digital Channels: APAC FI Study”. An estimated budget of US 83.3 million will be used by financial institutions to purchase the latest technology to tackle fraud till 2021. 57 percent of APAC financial institutions are claiming they’re working towards upgrading fraud prevention infrastructure while 50 percent have already made investments for digital onboarding fraud solutions, including Thailand and Indonesia with the biggest fraud budgets at US 95.4 million and US 88.9 million respectively.

AP Automation Arsenal: A WMD to Fight Fraud

A strong defense against fraudulent activity consists of multiple technologies that make an AP automation solution truly intelligent. To begin with, automated invoice processing allows time to be saved and eradicates human errors. Suppliers can send their invoices in the format of their choice through multi-channel invoice capture. Artificial intelligence technology captures and analyzes invoices coming in, determines the document layout, and extracts the required information. An electronic archive of invoices, including other financial documents, is available thanks to workflow and imaging solutions. Process orchestration automatically sends exceptions to human AP employees for review and approval. 

The technology also creates a document ownership trail, tracking the actions and handoffs between human and digital workers. Some intelligent AP automation solutions from providers have intelligence built in. They can even automatically detect items to extract from an invoice and whether pay slips have been manipulated—an important weapon for fraud detection. Intelligent automation can also be applied to onboarding suppliers, with automatic validation of key information like addresses and tax data. 

With automation technology in place, AP teams will be aware of common human errors like invoice fraud or duplicate payments. Additionally, unfamiliar vendors sending fake invoices will be identified as a red flag based on the AP staff guidelines. If an invoice states payment above the agreed amount, the automation system will trip for a review. It’s similar for invoices from new vendors or when the invoice amount doesn’t match the associated purchase order (PO). Automation can also verify whether invoices match up with the goods ordered or received. 

Advanced analytics can identify changes in vendor behaviors which may be a cause for concern, and third-party sources can be integrated to verify the validity and authenticity of new suppliers and vendors. With invoices being automated, AP staff have extra time to examine other scandalous events. Traces of possible fraud can also be detected by staff with audit trails.

The battle against fraud continues to morph as scammers become more mature. At the front lines are AP teams serving as your best defense against financial crimes. Don’t send them into combat unarmed. With intelligent AP automation technology, AP staff can work (and fight) like tomorrow, today. 

Automation In The Post-pandemic Landscape: Challenges, Results & Recommendations

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Fatihah Ramzi, DigitalCFO Asia | 25 October 2022

Charlie Cheah, Director, Sales & Services, Asia, Esker

As the world economy battles to recover from the pandemic and businesses look for resilience and a return to stability and growth, automation is now regarded through a new lens. Since remote and hybrid work are set to stay, they pose new challenges for workplace digital literacy. Other advantages of automation include improved document visibility for businesses, a smaller carbon impact, and more productivity.

To find out more about automation in the post-pandemic landscape, DigitalCFO Asia spoke with Charlie Cheah, Director, Sales & Services, Asia, Esker to get further insights on the challenges as well as results of automating one’s organization. 

Automation Solutions That Are On The Uptrend In Today’s Market

A procure-to-pay (P2P) system was formerly quite popular in Asia. However, when the world entered the post-pandemic setting, the scene changed. The industry is noticing an increase in inquiries and demands for O2C automation software that uses robotic process automation (RPA) and artificial intelligence (AI) to expedite the order-to-cash cycle and enable faster accounts receivable turnover. E-invoicing in Accounts Payable (AP) and Accounts Receivable (AR) is an intriguing new trend.

New regulations and adoption timetables in both B2G and B2B are pushing the adoption of e-invoicing in the APAC area. In the global market, this is no longer a novelty but rather a reality that forces businesses to reinvent and modernize themselves in order to meet the expanding demands and standards for tax compliance.

For the time being, only Commonwealth agencies in Australia are required to use e-Invoicing effective from July 1, 2022. Nevertheless,  Australia is getting ready to introduce e-Invoicing in the B2B market. It has started a public consultation on business adoption of e-Invoicing for this reason. The Business eInvoicing Right (BER) initiative’s goal is to increase the adoption of e-Invoicing among businesses. With several Asian countries (Indonesia, Japan, Taiwan, and South Korea) already making e-invoicing mandatory and others moving in that direction, this could encourage further nations in the APAC region to follow suit.

Immediate Results Of Automation

1. Visibility 

Once a solution is live, teams can use it to develop and maintain a single source of truth for any given workstream, project, or process. This is one of the most noticeable immediate results. The employees now have access to the data they require to finish their work on time or even earlier thanks to the solution. Documents do not easily disappear because of this visibility, and staff can keep track of who last worked on them, where their progress is right now, and their status.

2. Lower Carbon Footprint 

Another immediate effect would be that everything is now digital and paperless. Businesses use a lot of paper every day, whether it be memoranda, tax paperwork, reports, spreadsheets, or reports. By substituting digital papers for physical ones, business automation enables them to save money and cut down on waste. 

The content is kept safely via the cloud and is available from anywhere with any device, so it not only saves paper but also really makes it easier for everyone in the organization to access and use the information. Businesses can reduce their paper usage, which advances the sustainability mission by requiring fewer trees to be cut. The carbon footprint of the company will be reduced as a result.

3. Increase Productivity

Employees in an automated setting have more time, freedom, and resources to devote to strategy, research, and technology rather than physical labor. This results in a significantly greater percentage of employee productivity. Because automation eliminates so many pointless time-consuming chores, workers are better able to concentrate on jobs that bring value, which leads to improved productivity at work.

Challenges In Supporting A Hybrid Work Model

1. Effective Change Management

“Working remotely or having a hybrid work model is actually doable despite a lot of scepticism,” says Charlie Cheah, Director, Sales & Services, Asia, Esker. 

Employers still anticipate their workers to return to the workplace in the post-pandemic environment. It is merely a result of a refusal to let go of the established workplace culture from pre-COVID times. Because hybrid work arrangements give employees more freedom and would be beneficial to their well-being, most businesses in the post-pandemic landscape choose to continue with them. 

Senior employers, however, hold a different opinion. Despite the effectiveness of remote work during the epidemic, several businesses still have plans to encourage employees to fully return to the office. Hence why Charlie Cheah, Director, Sales & Services, Asia, Esker, believes that effective change management is key to getting people, especially the senior management, to accept a hybrid working model.

2. Supporting Digital Literacy

Being able to send an email or type using a word processing application was once considered to be proof of digital literacy. Knowledge employees, who might utilize particular software at work and need to be proficient in how to use it accordingly, were mostly required to have this talent. But the expression has substantially changed. Today, being digitally literate means possessing the abilities necessary to succeed in a culture where internet platforms and mobile devices, among others, are used more frequently for communication and information access.

Digital literacy is becoming a mindset, not just a practical requirement. Employees are expected to quickly acquire any technology that comes with their employment in the modern workplace, as well as adjust to always evolving tools and methodologies. Additionally, it is expected that employees will strategically leverage technology, from utilizing personal mobile devices to utilizing collaborative workflow programs.

Companies who do not promote digital literacy training in the workplace may find that a large number of their employees are submitting their resignations because they are overwhelmed and frustrated trying to keep up with the most recent technology or business software. Because of this, giving staff digital literacy training will aid in their adjustment to a hybrid workplace.

Positive-sum Growth In Supporting Long Term Growth

Esker believes that positive sum-growth creates a condition where everyone in the company ecosystem benefits. The outdated “when I win, you lose” mentality is ineffective in today’s competitive economic environment. Companies can lay the groundwork for long-term growth by automating their customer service and financial operations. With Esker’s positive sum-growth approach, businesses may become more sustainable and contribute to the fight against global warming by automating their processes to use less paper and produce less carbon.

Automation will help businesses increase employee satisfaction and motivation because content workers contribute to a successful business. Esker’s technology makes it simpler to draw great people to your business and keep them there. Additionally, businesses will see a gain in value overall. Companies will be the one thing every client wants — a firm that’s simple to do business with — by filling the gaps in their process that might sour relationships with the O2C solution portfolio.

Recommendations When Starting On An Automation Project

1. Have The Right People Involved

“First and foremost, you need to select the team that’s going to deliver your automation project,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

The project does involve automated technology, but you need the right people to use them and move the project along. Choose a central, cross-functional team to lead the initiative. Although the business can lead a process-driven initiative, you will also require assistance from IT and Operations. The most effective individuals at bringing about change and transformation are those in the IT, operations, and business process specialist roles. By having these people onboard, the company can experience a smoother transition in automating their processes. 

2. Budget 

“Do not compromise on budget,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

It’s crucial to comprehend the full financial impact of an automation project. Make sure the service provider is open and honest about any fees related to the automation project. This is done so that project selection can be prioritized to optimize value. Leaders can then figure out which projects give the most advantage from a time and processing perspective. 

Leaders will also be better able to appreciate the benefits of relieving staff members of mundane work so they can concentrate on jobs that call for original thought and problem-solving. Calculating the productivity and economic benefits of an automation project will require knowledge about the cost in terms of both time saved and compute resources.

3. Management Support

“Do not just talk the walk but walk the talk as well,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

What does that mean exactly? There are a lot of leaders out there, according to Charlie, who do not genuinely use automation and digitisation for themselves. On a corporate level, the corporation does automate, but on a personal level, they still choose conventional techniques like filing and paper documents. Essentially, executives need to set an example by automating and digitizing their own work operations. It is ideal for senior executives to set similar goals for themselves if the company’s goals include going paperless.

4. Measurable Benchmark

Clearly defining what success looks like before starting an automation project is the most crucial stage. This is a crucial indicator where the business should be able to quantify, identify, and comprehend the economic benefit of automation with ease. For instance, an insurance business might seek to raise operational first pass rates or claim automation rates from 55% to 75% during the given year. This specific example makes it easier for teams to understand how to gauge the benefits of the automation project right away, keeping them on task and laser-focused on their intended objective.

Impact Of Accounts Payable Automation In Today’s Ever-Changing Landscape

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Fatihah Ramzi, DigitalCFO Asia | 24 May 2022

Marcus Rex

Managing Director at xSuite Asia Pacific

Manual AP processes created several issues long before remote working became the norm, and they will continue to do so even after employees return to the office. Change is tough for everyone, but accountants are notorious for clinging to tried-and-true procedures.

The change to remote working due to COVID-19 was not simple, but finance departments had little choice but to adjust. After making the transition to remote working, many companies appreciated the benefits of AP automation solutions. However, many businesses are still undecided about how account payable automation may help them.

To address this, DigitalCFO Asia spoke with Marcus Rex, Managing Director at xSuite Asia Pacific to gain a deeper understanding of the benefits of accounts payable automation and how the accounting department can benefit greatly from it, be it the older or the younger generation of employees. 

xSuite; What’s New And What Are They Currently Doing?

xSuite is a German headquartered software firm specializing in finance automation and they assist financial leaders to automate their financial processes, particularly their accounts payable.  During COVID-19, xSuite has seen a lot of companies that had to move to remote work and digitse their processes in order to still operate their businesses as before. Due to this, they saw a big demand in these areas and are still seeing it today. This is because companies are starting to realise that they need to push more with automation to be more competitive in today’s world. 

Impact Of High Turnover Rates On Finance Teams 

The subject of great resignation is spreading through the entire world and right now. 

“Yesterday, I spoke with someone in America and they mentioned that they are unable to hire people who live close to the office,” commented Marcus Rex, Managing Director at xSuite Asia Pacific.

 xSuite observed that people have changed their behaviours and opinions towards jobs where they want jobs to be more independent, they do not want to comply with strict rules. Marcus Rex pointed out that in Singapore, there are about 45,000 open positions right now across LinkedIn, Indeed and JobStreet posted in the country for accountants or accounting departments. 

However, he noted that there were only 1500 to 1600 of first-level positions for degree holders in accounting compared to the 45,000 open positions. From this observation, there is clearly a huge disparity between graduates and open positions which imposes very big risks for finance departments. 

What Could Have Led To The Low Number Of Accounting Graduates?

A lot of young graduates, when they start their accounting jobs, find themselves doing a lot of repetitive tasks which they do not enjoy.

“Many young accountants spend their day keying in invoice data and they have to follow up with their colleagues over and over again just to get approval and to pay out the invoice.”

Marcus Rex, Managing Director at xSuite Asia Pacific

So, these repetitive tasks are clearly something that people do not really like and this is where xSuite comes in and helps finance leaders to take some of these repetitive tasks away from the accountants so the accountants can concentrate more of their time and energy on really value-added work. 

Effects Of Accounts Payable Automation On Senior Staff 

xSuite has observed that over the last couple of years, when a finance leader decides to bring in automation, they see that in senior generations of accountants, there is a lot of hesitation and fear of how these automations could affect their job. The senior staff have this belief that once the automation goes live, they will lose their jobs as they have become redundant to the company. 

But in many of these cases, xSuite will advise financial leaders to bring everyone in the finance team on board including the accountants when making decisions to bring automation to the company. This is because, it will help them, especially the older staff, to see that it will make their work life easier than before as they no longer have to do these repetitive tasks and in most cases, they should not be afraid of losing their jobs. 

Whereas for the younger workforce, automation will definitely be more enticing to them as they are much more tech-savvy. It will be much better for them as they can come in to work and immediately concentrate on the more value-added tasks and not sit there typing data into invoices which is rather boring. 

How Senior Accountants And The Younger Accountants Can Complement One Another? 

The older generation has vast experience when it comes down to how to conduct certain procedures and how to work particular invoices whereas the younger generation is more tech-savvy and can quickly adapt to any technology but may not be as experienced. 

With both having their strengths and weaknesses, they complement one another greatly by covering where the other lacks and this can be a very healthy environment for any company. Having different generations in an accounting team will greatly benefit the company. 

Remaining Forward-Thinking And Agile In This Ever-Changing Landscape

Seeing it from the finance perspective, finance leaders and CFOs have to look very much into what kind of technologies are available to help them improve their internal processes because companies really have to focus on their core business in delivering goods and services to their customers. 

As there is an existing challenge in the digital supply chain, having a finance department that is flexible and quick in their operations is critical. Businesses must make sure that they pay all their invoices on time even when they have reduced staff and accounts payable. 

“Having all your invoices paid on time will help businesses to secure their relationships with their vendors which is very critical right now,” states Marcus Rex, Managing Director at xSuite Asia Pacific.

So from this perspective, automation, technology and finance departments must be looked at as a whole by finance leaders instead of concentrating on just the finance department if they seek to remain forward-thinking and agile. 

The Secret Sauce to Improving Your DSO & DPO

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Written by Justin Cunningham, Esker | 2 March 2022

2020 was the year of supplier shortages, drastic demand fluctuations, increased operating costs and liquidity pinches. No matter which end of the spectrum your business was on, supply chain leaders were forced to take a fresh look at their business model to ensure they can weather the next storm and come out on top. For many innovative leaders, this means new ways of thinking and capitalising on digital transformation to realise real results on their balance sheet.

After a year chock full of uncertainties, businesses are finding that the time in which they collect and make payments is having an even bigger impact on their ability to maintain a healthy cashflow. Luckily, there’s a way to speed up both collection and payment through a single, AI-driven platform.

DSO and DPO: What they are and why they matter.

Before diving in too deep, let’s lay some groundwork.

Days Sales Outstanding (DSO) is the measurement of how long it takes for a company to collect payment on an invoice. The “why it matters” part is pretty straightforward here: the better (or lower) your DSO, the faster your business is getting paid. A high DSO has a tremendous impact on cashflow and revenue and can prevent you from investing in your company’s growth. Reducing DSO, even slightly, can go a long way toward improving financial health.

When it comes to gauging “good” and “bad” DSO, the Credit Research Foundation’s National Summary of Domestic Trade Receivables found that the average DSO in Q2 of 2020 was 41.56 days. As a general benchmark, you can consider anything below 45 days to be a low DSO. Not sure if your DSO is competitive in your industry? Take a look at competitors — they’ll let you know if you’re falling short or not.

Days Payable Outstanding (DPO), on the flipside, is the efficiency ratio for how long it takes for a company to pay its suppliers. And like DSO, it can pack a major punch when it comes to cashflow performance. DPO can also be the determining factor between suppliers considering your company a “good client” or a “bad client”. There’s currently no benchmark for a “healthy” DPO due to the variability of industry, competitive positioning and bargaining power of organisations. That’s why keeping a close eye on your DPO and your competitors’ DPO is important for gauging your payables performance.

This is where you say, “Cool beans, now how exactly do I improve DSO and DPO?”

And that’s when I say, “Shhh, keep reading.”

The “secret sauce” for improving your DSO and DPO.

Let’s not overcomplicate it. Improving any process usually comes down to efficiency, and DSO and DPO are no different. By creating a faster, transparent and streamlined process for collecting payment on invoices and paying suppliers, DSO and DPO will automatically improve. Speaking of automatic …

There’s one thing that forward-thinking business and supply chain leaders have found to be monumental when it comes to all-around efficiency and cashflow performance, and that’s AI-driven automation.

You can’t improve DSO and DPO without optimising the core procure-to-pay (P2P) and order-to-cash (O2C) processes that determine them. These cycles are inextricably intertwined, therefore automating one and not the other can create departmental silos that can result in new inefficiencies, and can be an overall disservice to your ability to optimise working capital.

The secret sauce to a better DSO and DPO isn’t just automating P2P and O2C processes, but automating them through a single, integrated platform that simplifies and standardises your organisation’s finance function as a whole.

Digitally transforming P2P and O2C processes through a single platform leads to better DSO and DPO ratios by:

  • Automating invoices, collections, payments and cash application to make it easy to be paid and pay others in a timely manner
  • Eliminating the costs of resources once needed for manual P2P and O2C processes
  • Providing end-to-end transparency across all workflows and cashflow activities via customisable dashboards
  • Drastically reducing the risk associated with manual cashflow management
  • Improving relationships with suppliers by ensuring timely payment and providing an online self-service portal that makes it easy to communicate, ask questions and access invoices
  • Offering supply chain financing, which allows supplier to bolster their working capital by opting for faster payment in exchange for a discount of finance fee
  • Best-in-class AI-driven data capture that continuously improves the more it’s used
  • Providing a customer self-service portal that allows for easy communication and management of customer information, which ultimately leads to stronger customer relationships

These are just the tip of the iceberg when it comes to the benefits of automation. For more information and a deeper dive into financial transformation, check out this ebook!

Conclusion

The ideal DSO and DPO, is at any organisation’s discretion. Some want the DSO to be as short as possible while extending DPO as much as they can, so they can keep cash on hand for a longer period of time. Others chose to pay vendor invoices quickly to leverage discounts granted for early payers. However, one thing is for sure: to achieve the desired equilibrium and performance for your P2P and O2C value streams, you have to overcome silos in your finance organisation. You must encourage a cross-department team spirit and understand how the actions of one team will affect the other.

By managing both O2C and P2P on one platform, you’re able to instantly see everything from one view. Giving you a complete and real-time view of your financial health.

Working Capital Improvements in a Supply Chain Crisis

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Written by Dan Rogney, Esker | 21 February 2022

In March 2020, whether they were ready for it or not, companies across every industry were abruptly thrown onto a roller coaster ride of harsh business challenges. Some managed to ride it out relatively unscathed, others hung on for dear life, many more fell off.

Now, despite COVID’s initial “shock to the system” far behind us, countless companies are still trying to find their footing in an unsteady landscape — the supply chain crisis being a particularly vexing disruption.

How Cash Position Impacts Supply Chain Efficiency

The lingering pandemic has made global supply chains even more vulnerable than they already were — in many cases, requiring supply chain leaders to focus on things outside of their normal scope, such as minimising the amount of money tied up in inventory and other areas of the business. For example, organisations who purchase supplies overseas are all competing for same goods — goods that are needed to serve their customers. The “winner” in this supply chain standoff is ultimately the company with the most cash on hand.

The question is, how can companies — many of whom are cash-strapped themselves in a still-uneven economy — unlock trapped liquidity and increase their working capital to get the products they need to serve customers and stay competitive?

As Esker’s Aaron LeHew discussed on S2 Episode 9 of Esker On Air, companies need to be proactive in implementing creative ways to set themselves up for success. “Even organisations with a strong balance sheet can be exposed to risks through the [financial] health of their customers and suppliers,” says LeHew. “This is either a moment to seize or sustain a competitive advantage or risk damaging the financial health of the organisation across the supply chain.”

Automation’s Role in Optimising Working Capital

Maintaining liquidity through 2022 and getting through the current supply chain crisis will require businesses to find new “levers” to pull that help quickly release cash. For many, AI-powered automation solutions are a catalyst to do just that thanks to their proven ability to:

  • Free up staff from manual, repetitive tasks that inhibit their ability to perform value-added tasks and slow down cash conversion
  • Empower multiple teams and departments with increased financial oversight, predictive analytics and performance monitoring
  • Improve the customer experience by offering self-service tools and greater autonomy

In the end, it all equates to smarter growth and increased financial resiliency — things every business will need whenever the next roller coaster swoops in to take us for a ride.

Want to learn more about automation’s role in optimising working capital? Check out the full conversation with Esker’s Aaron LeHew in Episode 9!

The Wild World of Deductions: Don’t Let Short Payments Eat into Your Margins

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Written by Aurélien Coq, Esker | 18 February 2022

Despite Will Smith’s recent declaration that the 1999 movie “Wild Wild West”: “[is] a thorn in my side” and in addition to the fact that it is universally considered to be both a critical and commercial failure, I admit that I enjoyed it a lot. Granted, the story line is all over the place, but, nonetheless, I found the movie very entertaining.

What does this have to do with deductions and margin preservation? I guess not much, but the first analogy that comes to mind when thinking about deductions is actually the Wild West with its lone rangers, vigilantes and this Wild Wild West movie: very few rules and pretty disorganised.

Food, beverage and consumer goods manufacturers and distributors often face enormous hurdles to getting paid on time and in full by big retailers. It almost seems as if retailers follow John Wayne’s advice to “shoot first, ask questions later”: short pay an invoice first, explain why later — and often only when vendors make a request to do so.

Many deductions actually turn out to have a valid reason, either by being linked to promotions or previously arranged trade agreements. Resembling the lawlessness of the Wild West, the practices in the deductions space are only loosely delineated and rarely properly defined. This can open the floodgates for questionable or even completely baseless deductions that retailers push onto their suppliers. The vendors then end up struggling to keep up with all the various claims, oftentimes drowning in investigative processes that can include people from different services such as finance, customer service, sales and anyone up and down the supply chains.

Some companies simply abandon claims reviews for small amounts, because they calculated that it would cost them more to spend time and resources verifying each claim then starting a disputed payment resolution process with their customer. One Esker customer told us they actually had a threshold of $250, at which dispute resolution proceedings started, simply writing off any amounts below that. This aligns with research from a 2018 IOFM report on the costs of researching and resolving unauthorised customer deductions. It is important to note, however, that deduction write-offs dilute the company profits and can have a big impact on the bottom line. This becomes even more obvious for businesses working on a limited margin: operating on a 5% margin, for example, $1M of prevented or recovered deductions have the same impact as an additional $20M in revenue!

As I said in Esker’s recent press release — albeit in a more grandiloquent tone than here: “Every penny counts! We want to help businesses keep deductions under control by enabling them to easily track and investigate deduction claims.” Retail suppliers should not consider deductions to be a lost battle, but should rather try to improve their order-to-cash process. Adding automation technology will facilitate claims research and collaboration, both within the company and with customers. AI-based processes automatically capture data from supporting documents and connect the dots between these and the associated payment deduction. An electronic workflow based on claim type and amount ensures that all checks and approvals are handled quickly by gathering all the evidence and making a decision about whether the deduction is valid or needs to be disputed easy.

At Esker, we work to inspire positive sum-growth. This is a fancy way of saying that customers and suppliers should generate value together rather than at one another’s expense. Unfortunately, this is not always the case in the wholesale distribution world, as retailers tend to take advantage of the power imbalance with vendors, evidenced by those wild deductions that are often forced on the vendor unilaterally. Luckily we do not live in the Wild West of the movies, and similarly, the wild horses of deduction claims processing can be tamed with organised processes and improved communications. And there’s a happy ending, too: one where mutually beneficial customer-supplier relationships can be achieved.

So go and watch that old Will Smith movie, and maybe you, too, will be inspired to bring some organisation to a somewhat lawless landscape. And, speaking of wild — spoiler alert ahead! — the bad guy’s giant steam-powered tarantula is really something…

Using analytics to alleviate fraud risks in financial services

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Attributed to Adam Mayer, Senior Manager, Technical Product Marketing, Qlik | 8 February 2021

Adam Mayer

Senior Manager, Technical Product Marketing, Qlik

Fraud typically involves deceit with the intention to gain at the expense of another illegally or unethically. Everyone can be vulnerable, as bad actors target both consumers and organisations alike. There are many types of frauds that consumers and organisations in the financial sector can be exposed to. For example, consumers can suffer from credit card frauds where someone steals their card details and misuses it, while banks can fall for loan frauds when customers borrow money from them with no intention of repaying the debt. Insurers aren’t spared as well and can be victims of insurance claim frauds where customers make claims for theft or breakage of items which have not actually been stolen or broken. 

Fraud is becoming more prevalent in this increasingly digital world. With a focus on digital payments, financial criminals have also shifted their targets online, as seen in the recent spate of phishing scams involving OCBC Bank in Singapore where 790 customers lost a total of S$13.7 million in one month. Globally, the number of online card fraud attempts increased by 23%, according to Feedzai’s Financial Crime Report Q3 2021 Edition. Therefore, it is important for financial services to stay on top of the potential risks they or their customers may be vulnerable to. Organisations must put in place processes and adopt the set of right tools to monitor and predict any potential risks for them to act quickly and nip it in the bud. Here is where data and analytics tools can help.

Analytical products can help organisations learn about the trends based on data around the types of frauds that are occurring, its frequency and severity to enable them to patch the potential gaps in their products or services. When it comes to fraud analysis, traditionally, financial institutions would have a set of rules in place that would examine requests and offer a decision to proceed with the request (or not). Unfortunately, as more rules are constantly added, these rules-based anti-fraud systems become very complex, and they don’t always adapt to hidden threats. This sometimes results in too many false-positives – blocking legitimate transactions while missing out on fraudulent transactions. 

On the other hand, analytics together with machine learning (ML) provides the ability to collect massive amounts of disparate data, analyse that data at scale and in context, and assign a risk score in real-time. This enables a risk-based fraud analytics solution to apply the precise level of security, at the right time, through step-up authentication. At Qlik, we have been equipping our customers with analytical tools and solutions to test and assess the adequacy and effectiveness of the business and IT controls that are in place to mitigate fraud. Examples include tests to identify unusual transactions, assess the frequency and value of transactions such as those that are above or below specific limits, and consumer behaviours that are out of the norm.

Implementing data and analytical tools to aid them in fraud prevention can be complex to some, especially small financial businesses. Here are some best practices on fraud analytics that can help organisations navigate through the process.

  • Use all available data to conduct fraud tests and ensure that these data are VACANT (Valid, Accurate, Complete and Nicely Timed).
  • Ensure that the analysis of the data achieves the desired purpose and use care in aggregations as it is easy to make mistakes in formulas. History is littered with cases where analysts made minor errors in formulas that caused major errors in results.
  • Instead of showing analysis results in tables, use visualisations to help tell a story with the results to create impact and drive change.

By leveraging data and analytics, organisations in the financial sector can take on a proactive approach to mitigating fraud based on the trends and predictions. Beyond enhancing the backend systems, organisations should also continuously educate consumers about prevalent scams, how to avoid them, and what to do if they become victims. Banks specifically, should create an open line of communication for consumers to escalate any suspected fraud cases so it can be dealt with in a timely manner.

The effectiveness of fraud analytics, along with consistent engagement with consumers, can potentially save organisations millions from fraudulent incidents and allow them to focus on the things that matter most – strengthening the trust between its customers and the brand.   

From Just in Time to Just in Case: The Shift in Logistics Being Made by the World’s Top Companies

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Karen Clarke, Managing Director, Anaplan APAC | 25 January 2022

Avoiding disruption in the new Supply Chain

Karen Clarke, Managing Director, Anaplan APAC

“In with the new and out with the old” is a popular Chinese saying that is synonymous with the spring cleaning of homes and buying of new clothes during the Lunar New Year season – traditionally the most important holiday of the year for Chinese communities worldwide. However, supply chain delays that continues to persist worldwide, could be frustrating for Asian families looking to get new clothes and furniture in time for the upcoming festive season. Just last year, companies like Apple and Amazon have already cut their projected earnings for the Christmas holidays, following huge losses in Q3 due to supply chain problems. Anyone in Asia who ordered a new iPhone or iPad back in November for the Christmas season would only receive the shipment in 2022 — a rare occurrence for the distribution mavericks at Apple who typically get products in the hands of customers in a timely manner and historically have been consistently placed in Gartner’s Supply Chain Top 25 since 2013.

In the west, we witnessed the supply chain warning of a shortage of small turkeys as families celebrated Thanksgiving only with their immediate family members due to ongoing pandemic concerns. We could see a similar occurrence here in Asia, where the Lunar New Year celebration is a significantly scaled down version from pre-pandemic times.

The issues most consumers experienced during Christmas could unfortunately just be a dress rehearsal for further supply challenges during the upcoming Lunar New Year celebrated throughout Asia from February 1 onwards. Typically, across China, factories are closed and capacity across the supply chain is drastically reduced as Chinese everywhere take time off to celebrate this most important festive season. While the long break during the Lunar New Year typically results in some disruption in the supply chain every year, the coming one will have serious ramifications to an already-traumatized supply chain and global freight market likely be felt well into the second quarter of the new year and beyond.

What does planning ahead mean in these uncertain times?

While it may seem that better connectivity across the supply chain and knowing “where my stuff is” are obvious answers, solving it is a Herculean task. That’s because many companies in the supply chain ecosystem in Asia still rely largely on legacy technology.

Today, many procurement planning teams still rely on business intelligence software to aggregate invoices and look at historical costs. Even before the pandemic hit, the limitations of these outdated platforms were obvious and had been challenged by factors like weather, oil prices, and changing customer trends. Today, there is no doubt that companies have hit the ceiling with these legacy applications, given the unpredictable consumer demand in the last two years combined with historical data becoming increasingly useless in demand-sensing and forecasting.

In an Anaplan-commissioned 2021 supply chain survey conducted by Reuters, approximately 60 percent of respondents said ‘they classed digitally transforming their operations as the “highest priority right now”.’ Indeed, the visibility companies have, typically reflects a lag of over a week. Companies today need to see even further, with daily or even intra-day visibility to give them a handle on better risk management and alternative sourcing arrangements. Just seeing problems coming—forwards to customers and backwards to suppliers and logistics—is not enough.

In fact, if the last few months have demonstrated anything, it’s that companies that have largely been reactive, transactional, and operating on a “what happened” mentality now face the vulnerabilities from their inability to act or pivot. They need to help their peers and partners understand that as much data as they appear to get from legacy systems, they need to digitalize completely to harness global supply chain data, and get real-time, multi-enterprise collaboration to drive actionable insight. That’s because as important as visibility is, companies need the agility to understand the implications and act. The Reuters survey revealed that approximately 20 percent of respondents indicated they were ‘data rich but insight poor’.

Given the amount of uncertainty, the ability to connect, share and collaborate with suppliers and partners can help companies enhance their operations, identify bottlenecks and embark on scenario-based planning—to become proactive, and switch from a “what happened” to “what if” mentality. The onus is on supply chain leaders today to plan for just in case, not just in time.

They can start by relying on connected platforms built for the supply chain and supporting ecosystems, so that they can approach their business operations in multi-faceted ways and anticipate the problems of tomorrow. Anaplan on Google Cloud, for instance, features a “supply chain twin” a virtual representation of their physical supply chain–by orchestrating data from disparate sources to get a more complete view of suppliers, inventories, and other information.

As the supply chains of yester-year continue to metastasize and the rippling impact is felt even during the happiest time of the year and the upcoming Lunar New Year, one thing is clear: consumers’ wallets and spending will take a beating, and so will businesses if they can’t fix the supply chain.

It’s time key decision makers across the logistics sector started challenging the status quo. While change is difficult for any industry, let alone one that’s been knee-deep in problems for so long, the good news is we are more ready than ever to tackle them. We simply need more business leaders to be better prepared to respond in timely fashion to emerging demand signals, to help them align their resources accordingly. In the spirit of the new Lunar Year, it is perhaps time for the supply chain to adopt an approach that promises to be “in with the new”, stay ahead of the competition, and be more than ready to confidently tackle volatility.

Karen Clarke, Managing Director, Anaplan APAC

Karen Clarke is Managing Director of Anaplan Asia-Pacific, based in Singapore. She leads and sustains business growth across Australia, New Zealand, Japan, India, North and South Asia. She was formerly VP for Northern Europe.

Previously, Karen spent 20 years at Oracle, in various leadership roles across the EMEA region.

Karen has a keen interest in women’s leadership, digital, and STEM skills development. She has held non-executive director and business advisory roles to software start-ups.

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