This is where you want to make sure you are getting the right amount of bang for your buck; if you decide to drop the money on automation and are still losing the efficiency game, you may need to go back to the drawing board. While many systems support transactional procurement processes, very few work-flow solutions currently support the generation of comprehensive category strategies and the systematic identification of savings levers. For procurement teams, life is a perpetual push and pull between internal and external forces. This includes both supply and demand, a scenario that’s very tricky because they don’t always move in the same direction. We are platform independent, therefore … The term “VUCA” is used to describe markets that are volatile, uncertain, complex and ambiguous. It counts the cash. Understand what the business needs are for procurement intelligence and develop anintegrated approach to Big Data analytics;9. Good Data And Reporting: Since the entire digital procurement management system is data-driven, it needs complete and accurate data. Having a ‘Digital Strategy’ in Place. There is an extensive literature describing what “world-class” or “best-in-class” Procurement organizations are. By analyzing these, you can ensure that when your digital transformation is complete, you aren’t behind the times. High-performing organizations tended to spend more than 4% on developing talent. PLUS… Access to our online selection platform for free. It’s a good idea to have a team monitoring digital competitors and keeping an eye out for new inventions. After you have developed a strategy, it’s time to execute it. The biggest impact of digitalization is increased speed. Are you going to need analytics in place? The range of digital integration these professionals had in their organizations was astonishing. The Golden Match for Digital Procurement Strategy Creation. Yet, significant challenges remain for those looking to reap the strategic and competitive advantages of digital skills in procurement. Automation, in particular, should save the company money each month. Software can help with this, but only if a company has clear goals. Among the most popular, prioritized solutions are: inventory management systems, multi domain master data management, e-invoicing, and spend analysis. But for newcomers to the digital procurement scene, the … What is Digital Procurement? The procurement process has evolved to incorporate more digital technologies. CPOs also expect … The Golden Match for Digital Procurement Strategy Creation. When asked about their level of technological skills, most respondents rated their companies as “average-to-weak”. Software can help with this, but only if a company has clear goals. Supply Chain Digital examines McKinsey’s report ‘Driving superior value through digital procurement.’. Many organizations are considering the implementation of digital tools to optimize their procurement activities. While Hackett estimates cost reductions through enhanced procurement digital skills to be around 29%, further research has also proven that 68% global organizations cite outdated technology as a significant pain point for procurement (which further stresses on the need for an overhaul of digitalisation strategies). “84% of procurement … Now you should be monitoring every task and process to make sure that software or other technologies are having a positive effect. A well-oiled and fully-functional digital-forward procurement strategy and operating model will allow executives to: increase spend under management, dramatically improve compliance, accelerate savings and significantly reduce risk. … Eventually, the digitalization of business processes will become ubiquitous, so unacquainted companies will be forced to catch up. For long, the rise of digital technologies and its positive impact on procurement has been projected as a procurement trend. In fact, preference should be shown to those with digital products and services. So with that in mind, here are some key statistics to focus on as we move toward 2020 and beyond. That’s second only to cybersecurity. Developing a digital procurement strategy often falls victim to one perilous downfall before even getting off the ground — creating it in a vacuum. All rights reserved. So, it should be clear why procurement is so important. Identify all of these critical factors, and by the time you are done, you should have a clearer vision of how your strategy needs to function when it is complete. The strategy will tailor solutions that unleash the full potential of digital. How is procurement going to function in the next five years and how does your digital procurement strategy fit in? Elouise Epstein Digital Procurement Futurist & VP Kearney. Following are a few tips on how using a centralized procurement function … Digitalization refers to the use of active digital procurement processes. Many organizations are considering the implementation of digital tools to optimize their procurement activities. The latest Deloitte study found a clear shift in procurement, with an accelerated pace of change in digital procurement. With beautifully rendered interfaces and flexible workflows, GEP provides users fresh, intuitive digital … Whatever the strategy, we believe “must have” digital procurement processes include digital requests for quotations, supplier financial analysis, procurement risk analysis, e-signatures and verification, and digital procurement network collaboration. The question is: what makes digital procurement different? Digital transformation is one of the greatest opportunities for Procurement today, comprising three main requirements that together lead to a successful digital-based organization. Digital Procurement is no longer an option but still uncommon. In a way, it’s like building a runway before landing a plane — you want to make sure you are prepared before your strategy lands. Procurement leaders and trailblazers can guarantee successful implementation through an effective strategy, but to begin, they must first identify the core values within an organisation that can be disrupted by emerging technologies. Many procurement organizations have already started to adopt digital technologies. Leveraging analytics and business intelligence tools can be very helpful in identifying possible suppliers. With the emergence of digital offering a plethora of new opportunities in procurement, it’s vital that … The world is increasingly headed in this direction with even small businesses taking the leap into the digital realm to keep up with bigger competitors. CPOs are finding that there’s a critical talent shortage in this area. Digital Procurement 2 Rapid advancements in digital technologies are remaking business supply chains, and are poised to transform how the procurement function delivers value. It’s a vital part of the business for any company that wants to grow fast and stand the test of time. Strategic Priorities for the Procurement Organization… We expect that adoption rates will continue to grow and, in many cases, accelerate over the next few years. This is part of the ongoing BCG series Strategic Procurement in the Digital Age, a comprehensive discussion of practices companies should follow for top procurement performance. This, in turn, transforms how buyers interact with suppliers and other third parties by serving as a platform for new levels and types of collaboration. However, they have distinct meanings, particularly in the context of manufacturing and procurement. Research by Procurement Leaders revealed that a fully automated procurement process could save the Global 5000 up to $86 billion a year. In order of option: All are expected to grow in the next 2-3 years, with advanced analytics expected to grow the most. Giles explains, “All of these technologies are going to give procurement teams a huge understanding of not only their past behavior, but also huge insights into their future actions and strategy. Mingling with procurement professionals, sourcing experts, category gurus and purchasing managers under the day gave me an incredible insight into daily challenges and pain points regarding their digital procurement strategies. VP Digital Procurement Strategy Schneider Electric. Then again, keeping track of everything on pen and paper or through a colossal amount of spreadsheets is a recipe for disaster in today’s fast-moving world of procurement. For others, the return on investment (ROI) isn’t clear, or the executive team doesn’t understand why procurement should be a strategic priority for information technology investments. Save my name, email, and website in this browser for the next time I comment. The Hackett Group found that world-class digital procurement organizations consistently outperform their peers. According to Deloitte, less than half of procurement executives believe that their teams have the skills and capability to deliver on their procurement strategy. Digital procurement strategies also deploy new and smarter ways to infuse data models to enrich day-to-day operations and decision making. This investment allows procurement teams to possess the skills and ability to deliver future strategies. 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