The Disruptive Power of Digital Procurement

By Hugo Britt | August 30, 2022

“Digital” is one of those vague terms that changes depending on context. For old-school procurement professionals, going digital may simply mean moving away from paper-based processes. Modern sourcing experts are more likely to point to Cloud-based, end-to-end procurement platforms, while those on the leading edge will list all sorts of disruptive technologies ranging from predictive AI to machine-learning enabled chatbots, IoT wearables, and more. 

A recent paper from Deloitte has helpfully categorized digital procurement into three areas: automated P2P (Procure-to-Pay), proactive SRM (Supplier Relationship Management), and predictive S2C (Source to Contract).

Digital procurement game-changers

In the P2P space, procurement professionals are already enjoying the benefits of automation including automatic replenishment, robotic process automation, trigger payments upon delivery, automated secure payments, and blockchain exchanges. 

Strategic sourcing experts are using machine learning to categorize and manage spend, AI to better predict demand, and act upon alerts such as contract expiry/renewals. Core digital capabilities that we now take for granted include spend analytics, eAuctions, electronic catalogs, data visualization, and more.

In the realm of SRM, organizations can set up automatic monitors of supplier risks, visit suppliers using augmented reality, and improve audits through crowdsourced information-gathering. As Deloitte points out, this shifts the whole approach of SRM from damage control to proactive risk mitigation. 

Whether you have a P2P, S2C, or SRM focus, there’s little doubt that you are leveraging the data flowing into your systems to optimize business intelligence and ultimately make better decisions based on real evidence.

Better customer service

In episode 31 of The Sourcing Hero Podcast, The Hackett Group’s Chris Sawchuk spoke of procurement technology’s enabling role in helping create a more customer centric organization:

[Procurement] technology is important in actually creating a better experience for our stakeholders to engage with us. That may be stakeholders that include the suppliers, the internal stakeholders internal to our organizations, and just creating an experience in terms of them engaging with us and creating much more self-service kinds of mechanisms for them to engage in getting information, finding out the status of certain things, et cetera.”

Sawchuk also notes that technology’s ability to automate manual tasks and free up time will help procurement better serve its customers. 

“This is an age-old discussion that we’ve had in procurement for many, many years – how do we reduce dependency on transactional types of activities and free up some of our time from those types of activities and shift that time to much more knowledge-centric types of activities? I think a lot of us would look at it and say, ‘Well, if we could spend more time developing strategies, that would allow us to be able to create more value for [customers in] the organization.’

Listen to the full episode here:

Where to begin with digital procurement?

Digital enablement in procurement starts with data. Look for internal sources of data (your organization’s total spend), make sure it is accurate, and channel it into a single source-of-truth such as an end-to-end platform or connected procurement ecosystem. Prioritize the extraction of data from sources such as Excel spreadsheets and transform it into a resource that is active, dynamic, integrated and useable.

Doing so will enhance visibility, slash maverick purchasing, enable spend analytics, improve demand forecasting, and enable accurate tracking of procurement KPIs (ultimately helping you prove the value of procurement to the wider business). 

Next, look for external sources of data such as market/commodity reports, supplier data, or third-party monitors to feed into your core system and enable benefits ranging from predictive forecasting to supplier risk monitoring. Ensure that your data is captured and visualized in an easy-to-use dashboard that will provide insights for better decision-making.

What's next?

With your data under control, the possibilities are limitless. But don’t make the mistake of jumping too far, too fast.

Before reaching for the very latest technology tool, it might be a better idea to use your new-found mastery of spend data to tackle some of the big, value-adding projects that you thought were previously impossible such as improving the efficiency of your procurement function or bringing tail spend under management.

Need some help managing technology vendors and deciding which tools will make the biggest impact? The Una team is here to help. Contact us to learn more about implementing digital procurement solutions. 

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