How Digital Transformation Accelerates the Procurement Lever

From manufacturing to education, every industry has reshaped their traditional business models with digital technologies. In fact, over 90% of the overall data has been created in the last six years and the number is still growing exponentially. Almost every global company has experienced unique challenges in terms of competition, business models, and value creation. To overcome these challenges and take their business to the next level, leaders are increasingly adopting new technologies, equipped with the latest tech such as AI, ML, and blockchain.

Out of all corporate functions, in recent times, procurement has witnessed a digital renaissance. From the introduction of early ERP systems in the 1990s, procurement leaders adopted a more holistic approach and created data silos for simplifying data. However, new technologies have called for a new value creation ecosystem which aims at more than just profitability. The question procurement leaders ask today is “What role will procurement play in our operating business model in five years?

Building the Foundation of Digital Transformation

For high-performing organisations, overall savings is never-ending and leaders have shifted their focus to finding greater performance levers that help gain a competitive advantage. By going digital, procurement leaders embrace an optimised combination of technologies, processes, and resources, that is built to directly impact attributes such as visibility, collaboration, speed, and predictability. We’ve highlighted some steps for companies to define their customised journey for procurement transformation.

1. Ideation and Design Thinking

Reshaping traditional procurement processes is the key agency of modern CPOs. However, incorporating Design Thinking as part of the next-generation procurement vision can help in creating an integrated ecosystem of services, content, and technology. Design Thinking is highly human-centric and harnesses traits such as intuition, inspiration, and emotion, to create concepts that favour functionality and profitability. This empathetic approach puts customer’s needs at the forefront while mapping expectations of various stakeholders - procurement buyers, finance officers, and supply chain managers. Understanding these expectations can help build a simple, intuitive buyer experience with improved compliance, visibility, and spend management.

2. Digitise Procurement Processes and Collaboration

The entire source-to-pay channels hold little digitisation when it comes to benchmarking, business requirement analysis, contract manufacturing, financial performance management, and stakeholder collaboration. Optimising the time and resources spent on such tasks can significantly reduce the pressure on procurement teams to produce results, trim costs, and manage the workforce. While digitising procurement processes has been a long standing story, implementing next generation procurement softwares, with combined capabilities of mobility, integrations, and cloud, can rapidly accelerate collaboration. These softwares offer consistent user experience and are built on the latest algorithms that can drive automated negotiations and eAuctions.

3. Use Analytics and Big Data

Modern procurement softwares generates a huge chunk of high value data. This creates an opportunity for procurement leaders to pull unique insights and leverage them to maximise business impact. Compared to the traditional ERP systems, next-generation procurement softwares collect and organise granular data based on targeted cost drivers such as product type, quantity procured, and spend across a business unit, distribution channel or a customer. These indicators offer factual KPIs to track the success of procurement channels and development of future procurement strategies.

4. Design a Digital Procurement Transformation Plan

While digital transformation in procurement has yielded tremendous opportunities for companies, it’s important to evaluate how your organisation makes the most out of it. From maintaining IT systems to nurturing supplier relationships, digital transformation can fundamentally change the way companies have been procuring goods/services over the years. Before implementing any new-age procurement software, it’s important for leaders to identify and prioritise KPIs that align with the company’s digital strategy. Even the procurement team must be trained for digital awareness to perform their daily operations.

5. Understanding the Expectations of Key Stakeholders

When implementing procurement software, it’s critical to map expectations of key stakeholders involved in the process including a business user, procurement managers, CPOs, and finance managers. Mentioned-below are the key expectations of these stakeholders

1. Business Users - As a first-hand user of procurement software, they focus on simple, intuitive buying experience that offers access to e-Marketplaces and centralised dashboard for all essential tasks. Digital procurement platforms eliminate the need for repetitive manual tasks over time and offer a quicker turnaround time with efficiency for buyers.

2. Procurement Manager - They perform functional tasks which involve making strategies and key decisions. Procurement softwares offers real-time, dynamic information related to sorting events, buying channels, contracts, and catalogues which helps in decision-making. Additionally, access to detailed insights on spend, performance, suppliers, and market intelligence, at a single dashboard gives a holistic view of the entire process.

3. Chief Procurement Officers (CPOs) - In procurement functions, CPOs focus on more than just cost to support value creation. They utilise procurement softwares to understand historic and ongoing operations that helps in creating baseline understanding of strengths, shortcomings, and opportunities. Their agenda is to gather insights that set strategic priorities for the business, assess any risks, and ensure high performance.

4. Chief Financial Officers (CFOs) - Finance leaders are highly interested in understanding cost performance and savings accrued from business operations. Procurement softwares offers in-depth visibility on cost and savings analysis across projects, categories, and business units. This gives CFOs a clear understanding of total expenses and savings that can help improve the total margin of the organisation.

Conclusion

For a company to steer forward, it’s important for business leaders to consider procurement digitisation as an opportunity. With the rapid pace of change around, new-age procurement softwares comes as a low investment instrument when compared to its benefits such as greater insights, environmental sustainability, and seamless efficiency. Implementing this “Agile” approach can yield value and fuel significant savings with minimum human intervention.

Procol is one of India’s leading procurement software that digitises and automates procurement operations for top companies such as Hershey’s, Dalmia, Cremica, Allana, Havells, Zetwerk, and more. Procol’s procurement software automates the entire source-to-contract journey and eliminates the need for any manual labour. Schedule a demo to understand how Procol can digitise procurement operations for your business!