Procurement has been trapped in a seemingly never-ending battle to preserve business continuity due to severe price erosion and escalating international trade tensions. Furthermore, state-wide lockdowns and limitations on non-essential commodities transportation have delivered a severe blow to an already strained supply chain network.
Several impediments to digital growth have evolved over the last decade. Internal user adoption is restricted, there is insufficient investment, and there is a lack of awareness of the benefits that digital technologies provide. These issues are largely due to the fact that the procurement function is frequently disregarded in terms of innovation.
Despite being a formidable data generator, it was viewed as a functional (and tactical) rather than strategic entity in most circumstances. The re-invention of technology is in high demand. There are numerous reports and research that discuss the difficulties of reforming procurement. However, data indicates that the tide is turning.
The re-invention of technology is in high demand. There are numerous reports and research that discuss the difficulties of reforming procurement. However, data indicates that the tide is turning. Procurement has risen to the forefront of strategic conversations and boardroom agendas as a result of the pandemic and current trade uncertainty.
As a result, more businesses are emphasising the importance of digitally upgrading procurement. According to a joint poll conducted by IIMM and SAP, more than 30% of SAP procurement clients plan to increase their technology spending in 2022. Procurement is a prime candidate for a digital revamp when seen from the perspective of Industry 4.0. Procurement has a lot of automation-ready processes.
Digitalised Procurement Unlocking Possibilities
The concept of digitising the procurement value chain is not new. Organizations began warming up to the idea of eProcurement in the early 2000s. Around this time, specialist concepts such as e-catalogues, spend cubes, e-RFX (e.g., RFQ, RFP), and reverse-auction platforms began to emerge in procurement.
This is where data analytics could come in handy. Procurement encompasses a variety of functions, including sourcing, compliance, and category management. Each of these functional domains has its own analytics use case. Consider the case of category intelligence. Procurement organisations can find the proper suppliers, limit supplier risk, and reduce unauthorised spends by employing category and supplier analytics. Similarly, analytics can help reduce buy price variance, provide access to reliable vendor records, and discover fraudulent suppliers when it comes to compliance.
The benefits of using analytics in procurement are numerous. However, procurement teams must consider upgrading their data maturity in order to realise the full potential of analytics. This necessitates the dismantling of long-standing data silos. Because, as with any other technological adoption, greater value is found at the top of the maturity curve with analytics.
Cloud data streaming is one way for businesses to accomplish this. One of the main causes of data silos is reliance on on-premise architecture. Moving to a cloud-based procurement system may aid in the creation of a more collaborative atmosphere. API linkages may also make it easier for procurement sub-functions to communicate with one another.