Supply Chains Suffering From Holiday Overload

Picture this: Amid preparing for a Thanksgiving family dinner, the flowers you had ordered from a business arrive — only, they’re not exactly what you ordered. They may be different sizes, arranged differently, include different flowers, despite placing an order for all of the arrangements to look the same.

It’s a scenario SciQuest CEO Rob Bonavito’s family found itself in last week and is an all-too-common situation for holiday shoppers when consumer demand spikes. Behind mishaps like these, Bonavito explained to PYMNTS, is a supply chain that’s out of sorts, with issues that can be traced to the buyer-supplier relationships within that chain.

“If you don’t have a procurement solution in place, there are a lot of dysfunctional occurrences that can happen across the supply chain,” the executive warned.

This time of year, the threat is magnified. SciQuest, which offers businesses procure-to-pay and spend management solutions, recently warned retailers and their vendors that procurement is risky business around the holidays. With suppliers unable to meet demand, business relationships can break down, and cash flow throughout the supply chain can become disrupted.

The overwhelming surge in demand, Bonavito said, is the top cause for some of the supply chain mishaps that can lead to consumer dissatisfaction.

“It puts a strain on the entire supply chain, trying to fulfill that demand,” he said. “The big thing you have to remember is that, every time there is a problem or a mess-up in the supply chain, you have to have a human get involved, either by handling the invoice or purchase order.”

Human intervention and manual processes mean the procurement process is slower and, often, more expensive.

In Bonavito’s case of the Thanksgiving floral arrangements, the company had refunded his family a 40 percent credit, as well as a gift certificate for their next purchase. It’s another example of how mishaps in the supply chain threaten consumer loyalty and eat away at profits.

But surely, somewhere in that supply chain, the buyer has also called into question its relationship with the supplier that was unable to fulfill an order.

“If you have an invoice discrepancy, absolutely, the supplier is not going to be paid on time,” the executive warned. “The costs associated with the buyer to get involved and to reconcile it can, in some instances, lead to a very tense situation between a supplier that hasn’t been paid and a buyer that’s confused on how to pay and reconcile an invoice. There are costs all along the supply chain.”

Corporates cannot avoid the surge in consumer demand and the sudden inflation of supply chain activity. But, said Bonavito, they can implement eProcurement and spend management technologies to not only remedy any issues that arise in the supply chain but to identify problems before they occur. Data analytics and forecasting are critical to a proactive approach — especially if data insight is in real time, noted the CEO.

“If you’re able to, in real time, monitor your supply chain, you can basically be a little more proactive in trying to correct or adjust your supply chain so your customers and suppliers aren’t impacted,” he said.

It’s a part of the supply chain optimization process that can ensure a profitable holiday season, loyal customers and strong relationships with suppliers. And while Bonavito said that, traditionally, this type of technology has been deployed by large global corporates, smaller companies are looking to take advantage of it, too.

For companies that have yet to implement optimized eProcurement and supply chain management tools, it may take the challenges and chaos of the holidays to convince a business to look into some solutions. With the New Year signaling the end of the winter holiday season, next year may be a big boom for eProcurement technology.

“Now, it’s starting to trickle down,” Bonavito said of the interest in these tools. “Especially going into 2017, we’re seeing a very strong pickup in interest.”