Don’t Wait for Tomorrow, Establish the Future of Procurement Today

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As procurement heads its known fact as to how digital technology and analytics will revolutionize tomorrow’s procurement function. CPOs around the world are stepping up to take advantage of the digital revolution. With digital transformation, procurement teams are in a unique position, as not only can they bring in technology to significantly improve their function but they can also help the business with broader initiatives.

It’s however also an important fact that only investing in technology and analytics alone will not deliver results. What’s more important is to combine it with robust processes, deep functional knowledge, and the right talent.

In order to derive value from digital, it’s imperative to have some of the following accelerators to be followed so as to take the full advantage of new technologies:

  1. Be clear in your objectives

It’s important for the CPO, before setting the objectives, bring in the knowledge of the wider business strategy and targets. Have an active voice in the organization’s strategic direction. Go beyond cost savings and focus on outcomes such as:

  • Profit growth: Drive revenues by improving time to market, accessing supplier-driven innovation, enhancing price-point elasticity, and developing new products and services.
  • User experience: Give business users a seamless experience when ordering products and services and improve supplier experiences to become their customer of choice.
  • Risk mitigation: Segment suppliers against a risk framework that includes financial risk, supply assurance, and reputation.
  • Operational efficiency: Standardize and automate processes to improve productivity, efficiency, and outcomes.
  • Working capital: Dynamic discounting can provide data and insights into asset utilization and lease versus buy strategies.
  • Innovation: Collaborate across the supply base to access new ideas.

Only then, with clear, business-aligned goals, can you decide which digital technologies procurement needs.

  1. Based on the procurement model create a technology roadmap

To gear up for digital, it’s important to have answers for the following questions:

  • Are your policies and processes standardized to simplify digital implementation? For example, many companies have rushed to adopt robotic process automation, but without standard processes, this technology will struggle to meet expectations.
  • Do you have the right resources and skills to deploy digital solutions? For example, if the function has a high number of category managers but few processes or systems experts, a new digital solution could be tougher to implement first time. And once you start gaining new insights from data, do you have the skills to apply critical thinking and make more informed decisions.

Do you have a technology roadmap? If you want digital to deliver long-term gains, assess technologies across four horizons:

  • Legacy technology: Your existing technology that delivers value and can inform your digital plans.
  • Latest technology: Solutions like robotic process automation, analytics, artificial intelligence and dynamic workflows. Procurement must understand how they deliver the best ROI.
  • Emerging technology: Keep an eye on what’s at the prototype stage, such as blockchain, so you know how they will affect processes and future requirements
  • Future technology: Understand solutions such as cognitive strategic sourcing, where a robot does much of the sourcing activity, so you make long-term decisions today.
  1. Integrate end-to-end processes

Procurement doesn’t operate in isolation. The function must be integrated across its own back, middle, and front office. And also across the business as a whole, with finance and the supply chain, in particular, to create an end-to-end process. Procurement also plays a critical role in forecasting, planning, controls, and budgeting. That way, budgets and approvals can then appear automatically in the ordering system.

And in supply chain and accounts payable processes, procurement can influence how goods receipts are assigned correctly and consistently, and link through to invoice approval. This will help suppliers get paid on-time with no need for manual intervention.

  1. Build collaborative relationships

Having strong relations across the business makes a difference. Technologies need consistent data to be effective and this data sits across functions. For example, when it comes to IT category sourcing, all business functions need to be involved:

  • Finance agrees the budget, accounting codes, volume forecasts, and auto approvals
  • IT confirms the specification and product availability in systems, budget approval, and demand forecasts
  • HR shares the organization’s team structures so you can apply the right workflows
  • Supply chain or finance details the goods receipt process
  • Legal approves the supplier contracts
  • Suppliers, once onboard, must become part of the end-to-end process so products or services are delivered on time and to the contract

Collaborating in this way makes everyone aware of their roles, which means data from the sourcing activities is where it should be in the ordering system.

  1. A culture of change

With a culture that embraces rapid change, experimentation, and innovation, new technology will take hold and create competitive advantage. And as the pace of change is not slowing, procurement functions with streamlined operations will adapt more quickly and be ready to support the business.

Conclusion

With these accelerators in place, procurement team will be definitely ready to realize the full power of today’s digital solutions. What’s more, the impact helps business grow profits, and manage risks. Digital technologies are opening up boundless opportunities for procurement. These five accelerators will bring the possibilities of tomorrow to you today. Think big! Reconsider what’s possible. You’re not looking for minor adjustments. You don’t want to be restricted by what’s considered best in class. You want a major shift that revolutionizes the user experience and operational efficiency. There are many opportunities to reach right now if you combine design-thinking techniques, domain expertise, and digital technologies.

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