The supply chain that supports just-in-time (JiT) manufacturing is beginning to reap the benefits of the digital payments revolution. By replacing accounts payable processes with automated digital alternatives, JiT manufacturers are realising that by overhauling how they transact they can save both time and money. Plugging into a modernised payments system which offers new, automated ways both to pay and accept payments, JiT transactions can be performed quickly, automatically and without human interference.
So-called “push payments,” where remittances are sent to the supplier at the point of order using a commercial card as the funding mechanism, means the payments process can be managed hands-free. By marrying this concept with the Internet of Things (IoT) stock management systems that monitor stock levels and provide alerts and reorder triggers, the whole stock reordering and payment process can flow automatically.
Not since the concept of JiT was formed on the Japanese Toyota production lines of the 1960s has such a leap forward in transaction efficiency been possible. By automating the payment process, the financial side of JiT can finally keep pace with automated stock ordering and fulfillment, lifting the final barrier to the new levels efficiency, speed and assurance for manufacturers promised by the digital age.
Digital payments as an enabler of automated JiT systems
Digital payments and JiT systems are both key enablers for the supply chain. Both are about streamlining processes and maximising efficiency to optimise output and profitability. The same key principles of automation and autonomation apply—on the production line, automated machines designed to detect faults and pause production to avoid mistakes were a key enabler of JiT production. In the case of stock reordering, automated, IoT stock management systems, and automated, real time payments act as the key enablers.
Automated payments mean maximum efficiency for manufacturers
With speed so crucial to today’s supply chain, little is more valuable to a manufacturer than the ability to operate in real-time. Thanks to automated push payments, when an IoT stock monitoring system automatically detects that a certain item has reached the reorder point, the whole process can be settled without human interaction. This means that stock levels can be replenished without the stock managers seeking cost approval and finance departments having to process invoices.
The knock on effect in JiT is that suppliers can run with lower stock volumes – something of particular benefit in fast-moving consumer goods and manufacturers of perishable goods – and eliminate the costs, margins for error, and delays naturally associated with human staff.
Additionally, the use of a commercial card offers enhanced data reconciliation that can prove valuable for manufacturers looking to improve efficiency by reducing costs and increasing spending transparency. They also offer the additional benefit of increased working capital offered by card issuers.
Push payments can benefit the supply chain as a whole
As automated payments present the opportunity for buyers to benefit, so too can suppliers. By nature of an automated stock replenishment system, the most responsive merchants will capture more market share due to their increased agility and also benefit from the reinvestment of resources released by automation.
On the buyer’s side, those who pay in real-time and commit to a clear roadmap of anticipated orders, are always going to position favourably in the market.
Supply chain payments could experience a real time revolution
The push payments revolution has the potential to set a new standard in manufacturing agility and B2B commercial card payments. It provides new levels of control, visibility and efficiency that haven’t historically been available either to buyers or suppliers. The days of manual transactions and paper-based invoicing systems are numbered and, while JiT manufacturing is showing the way, it won’t be long before all supply chain finance departments can stand back and let the machines take the strain.