AP automation and finance transformation: How AP automation can help enterprises build stronger, more resilient supply chains

How AP automation can help enterprises build stronger, more resilient supply chains

By Emily Nash-Walker, Global Head of Partner Experience, Tradeshift

With the chaos of the last couple of years, it’s no surprise that many global organizations are looking to make changes to their supply chains, making them more resilient. To minimize disruption, many companies are shifting operations away from countries or regions that are prone to volatility. But with these shifts into calmer waters come new challenges, like compliance.

AP automation, like the kind that Tradeshift provides, can automate compliance and even help create more transparency, resiliency, and optionality to help supply chains thrive.

Has the era of just-in-time manufacturing stretching supply chains to their breaking points finally come to an end? 

For decades, companies applied just-in-time principles when managing their supply chains to further profit margins. These principles allowed the flexibility to move from region to region based on manufacturing costs. Additional adjustments were then made when shipping and transport costs could lead to a further financial benefit. But with the onset of the pandemic it became clear that this approach had costs few had considered When there are disruptions, and your supply chain is stretched to its limit, it’s harder to repair or replace the parts that break.

In fairness, it wasn’t just the pandemic that brought about this mindset. War, such as Russia’s invasion of Ukraine and geopolitical challenges like the rising tensions in Asia, should have provided clues that stretching supply chains to their breaking points probably wasn’t a good idea. But it took the gravitas of the pandemic coupled with a series of unexpected geopolitical events to drive the point home.

Near-shoring is just the beginning; the best way to mitigate future disruption is through a multi-program approach.

By localizing, regionalizing, or near-shoring, enterprises are not only reducing the cost of transportation but also reducing the distance their supply chains travel and the number of countries/regions they travel through. This leads to more dependable product offerings, timely restocks, fewer outages, and more dependable relationships between buyers and sellers. But near-shoring isn’t the only thing enterprises can do; finance automation efforts can also build more resiliency and transparency into supply chains.

Seeing that you have a problem is the first step towards fixing it — this is why transparency is critical to building stronger supply chains.

When you digitize — for example, making the switch from paper to e-invoicing — you generate a massive amount of new data that you can view in real-time. For example, when there’s a hurricane brewing in the South China Sea or a port in Western Europe locked down because of new COVID regulations, you’ll have the ability to be proactive based on knowledge gleaned from your dashboards and not reactionary by reading the morning headlines like the rest of your competitors.

This gives you an edge on your competition, who still have yet to automate their processes. It’s now within your grasp to respond to challenges before they lead to problems and to switch out a seller/provider that’s been hit hard in one region with one from a different region that hasn’t been affected.

Compliance changes are coming for everyone, but AP automation can make it an afterthought.

Deploying e-invoicing globally is complex, and the pace of AP transformation is accelerating — by 2030, Tradeshift projects that almost all countries in the world will be on some sort of Continuous Transaction Controls (CTC) model. This means that they will require anyone doing business there to adhere to strict, localized regulatory frameworks.

AP automation companies certified to do business in Clearance countries will have the transaction rules already defined in their processes and updated accordingly helping the business run smoothly, no matter where it’s conducted.

Conclusion: AP automation and compliance build stronger supply chains.

Many tools are available to enterprises looking to respond more effectively to supply-chain disruption. AP automation, along with near-shoring, can add automation and compliance capabilities that will help improve resilience and build stronger supply chains.

Joining a global marketplace of buyers and suppliers like Tradeshift is also key to avoiding disruption because it means you can pivot instantly to solve a problem as soon as one arises.

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