With supply chains becoming more complex and globalized by the day, the ability to collaborate effectively and leverage digital technologies is crucial for businesses. The majority of information pertinent to supply chain management, whether it be sensing, forecasting, or predictive data analytics, originates from external sources — suppliers, external manufacturers, customers and other trading partners. This brings invaluable insights that open doors to informed decision-making — a “must-have” in today’s uncertain business environment. 

However, traditional, siloed legacy systems often hinder the collaborative efforts and digital transformation necessary to harness these insights fully. Organizations that depend on such systems are often forced to rely on their internal data and information, overlooking — or neglecting to pursue — the external data sources that could help them improve their supply chain performance, reduce costs and mitigate risks. 

By embracing a collaborative approach and adopting advanced digital technologies, organizations can unlock the full potential of their supply chains, enhance operational efficiency and gain a competitive edge in the increasingly saturated market.

It’s all about assurance of supply

Effective supply chain management requires the synchronization of disparate functions and effective collaboration across the end-to-end supply chain network. Working with SAP Business Network, Molex is a leader in using digitization to streamline operations, improve supplier collaboration, enhance visibility and optimize decision-making. 

A subsidiary of Koch, Inc., Molex designs, develops and produces electronic components like connectors, cables and switches. With thousands of global suppliers, Molex wanted real-time visibility into the movement of goods, inventory levels, and potential delays. The growing manufacturer also wanted to help its customers turn that real-time responsiveness into a competitive advantage in shifting market conditions.

Molex’s business model utilizes a “clear-to-build” process that ensures all necessary components are available for production. The company does this by analyzing inventory levels, purchase orders and supplier lead times, all of which help Molex avoid production delays, ensure smooth workflows across its manufacturing operations and keep its customers happy. 

Working with SAP, Molex rolled out a supply chain orchestration initiative focused on equipping teams with real-time insights, optimizing the customer experience and improving its competitive edge in the market. Tony Gainsford, director, supply chain at Molex, says the company’s other key goals included:  

• using interoperability to help integrate efforts across systems and teams;
• leveraging data management to predict demand patterns, improve resource allocation and identify risks to improve responsiveness and accuracy;
• monitoring the movement of goods, evaluating inventory levels and mitigating potential delays in real time;
• collaborating through secure communication platforms and shared dashboards that support better decision-making; 
• using artificial intelligence (AI) and machine learning (ML) models to streamline workflows.

Molex understood that these changes would not take place overnight, so it has adopted a long-term view of the project, which also includes elements like supplier performance measurement, network modeling, global trade compliance, employee training and material requirement planning. 

“Implementing specialized technologies across these areas with clear strategic intent creates a more comprehensive and cohesive digital fabric,” Gainsford says. “This, in turn, leads to greater supply chain efficiencies over time.”

Collaboration yields substantial improvements

To date, Molex’s supply chain orchestration initiative and digital fabric enhancements have yielded “substantial improvements” that help its customers maximize real-time responsiveness as market conditions shift. 

For example, Molex now receives order confirmations and advance shipping notifications (ASNs), which give the company a clear understanding of exactly when raw materials, parts and other key supplies will arrive and in what quantity. By collaborating closely with its supply sources, the manufacturer can confidently set its clear-to-build dates that, in turn, directly impact delivery promises made to its customers. 

“For Molex, it’s all about assurance of supply,” says Matthew Tichelaar, supply chain network executive at SAP. “They have to be able to monitor product movement and the associated inventory levels in order to be able to meet their own downstream customer demand.” 

“We’re working daily to enhance predictability and increase on-time delivery with systems that seamlessly adapt to unexpected disruptions and enable Molex to drive incremental improvements on behalf of our customers,” Gainsford notes.

Breaking down communication silos and digitizing processes also produce clear financial benefits. For example, both help companies operate more efficiently, condensing order processing times and improving cash flow. With less inventory on the books, organizations have more working capital to allocate to other strategic projects and often experience compressed order-to-cash cycles. 

On the accounts payable (AP) side of the equation, invoice automation means accounting staff no longer have to receive, sift through and pay email invoices. “Much manual effort goes into looking at invoices that come in via email versus those that are fully digitized, accurate and ready to process,” Tichelaar points out. “For this and other reasons, the financial benefit that comes from automating the AP invoice receipt and payment processing is very clear.”

How to drive project success

For organizations looking to emulate Molex’s success on the supplier collaboration and digitization front, Tichelaar recommends putting the right governance structure in place before implementation as a starting point. Get the right team members involved, share the vision with them, enlist their input and then lay out a plan of action that incorporates the organization’s core goals.

“Assemble a steering committee of global business process champions that can help oversee the deployment and take a pragmatic approach that includes strong communication with all stakeholders,” Tichelaar advises. “That way, everyone understands what you’re doing and why you’re doing it. That's what drives successful projects.”

Strategies like the ones employed by Molex can lead to improved efficiency, reduced costs and enhanced customer satisfaction. If your organization is ready to harness the potential of supplier collaboration and digitization and unlock substantial value within its supply chains, view this video to learn more about Molex’s successes.