In 2010, co-founders of IT giant Tradeshift – Christian Lanng, Mikkel Hippe Brun and Gert Sylvest – launched the company with one ambition in mind: to connect every business in the world. Having achieved success five years earlier in 2005 through the unveiling of Easy Trade, the world’s first open-source trade platform, the three men collaborated together again to create Tradeshift as the firm became a leader in supply chain payments. Now, the company is responsible for connecting 1.5mn businesses across 190 different countries, processing half a trillion dollars annually in transaction value as Tradeshift has continued to go from strength to strength.
We spoke with Sylvest and Roy Anderson, Chief Procurement Officer (CPO) and Digital Transformation Officer, who both believe the acceleration of digitisation has been key to its firm’s supply chain transformation, as technology becomes increasingly prevalent to companies worldwide. “If you’re trying to digitise in the supply chain, everyone is going to ask why they should change their processes and pay hefty consultant fees to move data out of accounting systems in order to accommodate one particular buyer from more than 100 buyers,” affirms Anderson. “It’s important to ask yourself ‘what's in it for me?’ The interesting thing that started happening from the middle of 2005 onwards was that all these economic models of social networks that were two-sided market models were centered around the cheap and efficient distribution of software globally. We felt the time was right to build a network that would work not just as these closed proprietary networks but a little bit more like a social network where you gave people incentives to join.”
With the role of the supply chain professional having grown and transformed over the past few years, Sylvest reflects on the significant shift in the supply chain space. “The supply chain is still a transactional engine in the older environment, whether that be either paper-based or minimally digital transactions,” says Sylvest. “If you look at the work level of a supply chain, 60-70% of people are mired in transactional activity. It’s low value, and it says ‘I need to get the job done’. It's interesting when you ask them about metrics and they talk about how quickly they managed to resolve an invoice problem; their metrics are how to solve problems on the back end versus asking why the problem exists at all. In a digital world, that all vanishes because the transactional work drops down radically due to the internal customer communicating directly to the supplier and getting their work done with no errors in the process.”
“I felt I could get strategic sourcing done for 80% of my spend because I was strategically sourcing the activity,” adds Anderson. “All the consultants up here say sourcing is a seven-step process, however when that happens you're not necessarily the best at it and you're still doing transactional work. The real value is looking at all the work that can be moved from the experts in the marketplace and onto the internal team that is spending the time where they’re most valuable. It’s important to collaborate with internal customers to understand the next generation of requirements and how they can get innovation from their supply base in order to be able to meet that expectation one, two and three years out.”
With the importance of building key supplier relations fundamental to the development of all successful companies worldwide, Anderson believes these partnerships are crucial to continued success in the supply chain sector. “In terms of supplier relationship management, the supplier is an equal participant in the ecosystem as the buyer,” he affirms. “The same goes whether it’s a one-person company in Indonesia or a Fortune 500 company in North America or Europe. We all have our own networks and relationships so I think step one is to empower the supplier to build the relationships with every other buyer that they have in their supply chains, otherwise it's going to be fragmented. Number two is that every company owns their own space so when they sign off, they have an account which they can 100% control in terms of who they share this information with. It's not a decision that we can make. We think that's the foundation of how you can create an ecosystem.”
Looking ahead, both Anderson and Sylvest harbour clear ambitions for the future of technology moving forward. “I believe that digitisation’s access to finance throughout the supply chain is very simple because if you understand what’s being ordered, who is ordering it and how it is being invoiced and couple that information with the logistics provider, you can very accurately assess a risk of such invoice not being paid,” notes Anderson.
“It’s important that we continue to look at how we can leverage machine learning to provide smarter tools to companies,” Sylvest adds. “Companies are eager to invest in ML and AI to drive efficiencies and improve processes, however, they aren’t going beyond the surface level to implement the technology to address the siloed workflows that are occurring at a fundamental level. Decision makers need to instead start by asking ‘how can ML and AI be used to empower all my employees to make better spend decisions?’ Secondly, many companies are trying to force digitisation on their supply chain, without providing clear benefits for the supply chain players. Companies need to take a step back and think about how they can best share the benefits of digitisation with those that they are looking to connect with digitally. This consideration stage reaches beyond a company’s internal teams and apply to their customers, ensuring everyone has an incentive to become digitally connected.”