Next-Generation Supply Chains: Building a Scalable, Connected Operating Model
Sponsored by Scottmadden
In an era of unprecedented disruption, rising costs, and ever-growing customer expectations, supply chains must evolve to remain competitive. Forward-thinking organizations recognize that moving beyond traditional, transactional models is key to delivering long-term value. Too often, companies find their supply chain professionals consumed by daily firefighting at the expense of strategic priorities.
The challenge? Designing an operating model that balances efficiency with flexibility, empowers the business, and enables strategic decision-making, while keeping customers and suppliers engaged and satisfied.
Drivers for Change
Despite advances in automation and process design, many supply chains continue to struggle with unclear roles, manual processes, and poor service accessibility. Too much time is spent on transactional work like purchase orders, payment inquiries, and supplier setup and too little on value-adding tasks like risk mitigation, spend optimization, and supplier innovation. Common pain points include fragmented processes, redundant approvals, lack of visibility into supplier data, and decentralized decision-making that slows progress. In some organizations, business units feel uncertain about who to contact or how to access supply chain support, resulting in a growing disconnect between the supply chain team and its customers. Addressing these challenges requires more than technology; it requires a new mindset that treats the supply chain as a connected, customer-focused service.
The Tiered Service Delivery Model
Leading organizations recognize that a successful operating model segments work into specialized service tiers:
- Tier 0 (Direct Access) – Empower business units and suppliers to quickly resolve routine inquiries through self-service portals, knowledgebases, and chatbots.
- Tier 1 (Transaction Processing) – Leverage automation tools to manage transactional work like invoice processing, requisition review, and supplier inquiries, freeing experienced professionals for higher-value initiatives.
- Tier 2 (Advanced Transaction Processing) – Focus on advanced transactional work that requires specialized skills, including resolving complex transaction errors, processing large or non-standard purchases, and handling supplier and payment exceptions.
- Tier 3 (Centers of Expertise) – Focus on strategic, high-value activities like supplier risk management, spend analytics, strategic sourcing, and inventory optimization.
By clearly separating transactional and strategic work and leveraging a middle tier for advanced transaction processing, the supply chain can deliver greater value while improving scalability, responsiveness, and job satisfaction across the team.
Enabling Technologies and Intelligent Automation
Technology underpins this connected model. Leading companies leverage automation tools—robotic process automation, chatbots, predictive AI, and generative AI—to support real-time service and reduce manual effort. For example, predictive AI can highlight procurement risks before they escalate, allowing teams to proactively resolve supplier performance or delivery issues. Generative AI can craft personalized supplier communications, produce insightful spend reports, or simplify contract analysis. However, automation only drives results when processes are first streamlined and standardized, data is cleaned up, and the team is equipped to properly use these tools. Ensuring high-quality data, from clean supplier records to accurate spend taxonomies, is also critical. Without this, automation cannot achieve its full potential and may introduce errors. Leading companies also invest in service delivery technologies, including portals and knowledgebases, which consolidate data into a single source of truth, allowing end-users to quickly access information and navigate the system with confidence.
Quantitative and Qualitative Benefits
Adopting a next-generation operating model yields measurable returns across the organization—both financial and non-financial. On the quantitative side, companies can expect:
- Cost efficiencies: Streamlined processes and automation reduce leakage and rework, generating 1%–2% savings on contracts and up to 25% savings on transactional labor.
- Cycle time improvements: Faster cycle times (by 20%–30%) enable the business to process supplier inquiries and payments faster, which improves working capital management and reduces days payable outstanding.
- Scalability: A tiered structure supports seamless scaling into new geographies, acquisitions, and product lines without proportionate increases in headcount or complexity.
Equally important are the qualitative improvements. Business unit leaders appreciate greater consistency and transparency across processes, while employees benefit from clearer roles and a more service-oriented culture. Some of these qualitative benefits include:
- Stronger engagement and retention: Clearly defined roles and more meaningful work reduce burnout and boost morale across supply chain teams.
- Enhanced service experience: Predictable processes, one-stop portals, and transparent service levels improve the experience for business partners and suppliers.
- Greater strategic focus: Experienced professionals spend more time on value-added initiatives like supplier innovation, advanced demand planning, and proactive risk management.
More strategically, companies gain the capacity to shift experienced supply chain professionals toward supplier innovation, category management, and other high-impact initiatives, making the supply chain a true competitive differentiator. Enhanced reporting and analytics capabilities support data-driven decision-making at all levels, equipping leadership with actionable intelligence to optimize the supply base and support future growth.
