Digital technologies are present in our everyday lives; so why not create more value and gain a competitive advantage by digitizing your procurement process? According to an industrial survey, around 84% of Chief Information Security Officers agreed that lack of visibility across the supply chain is one of the biggest challenges in supply chain management. This is primarily due to a lack of transparency owing to paper-based procurement processes, leading to information lag among the Chief Procurement Officer, finance department, and supply chain managers.
Moreover, the COVID pandemic created disruptions in the supply chain that caught many organizations off-guard, especially the ones which relied on paper-based processes and systems. With the inability to access orders or records and challenges in finding alternative suppliers and sources, the businesses using paper-based systems were not able to handle the pressures of the changing supply chain.
Even procurement managers may agree that the supplier and buyer relationship still majorly paper-based despite advancements in technology.
With that being said, now is the time for your business to capitalize on digital technology to digitize procurement processes!
Digitizing Procurement: Why Is Now the Right Time
Imagine this. You are overseeing the delivery of an order that requires approvals or sign-off from different departments and regulatory bodies. Plus, you may also need to manage hundreds of communication exchanges between the stakeholders. However, one of the departments loses a critical form which leads to a delay of almost a month.
Here, quick approvals and communication on a single platform with easy access to all order-related documents can help you avoid such disruptions. This is where digital or e-procurement can transform your business processes.
Digital technology is now not only easier to access and implement but also cheaper than before! Earlier, organizations spent many years transforming their processes digitally but now businesses can achieve that in just a few weeks without changing their critical goals—capturing value and creating an efficient bottom line.
With advanced analytical tools and in-depth information on spends, Chief Procurement Officers can utilise time and resources on category management, strategic sourcing, and supplier relationship management which are part of their traditional or expected responsibilities.
Moreover, access to real-time data on market trends allows procurement managers to keep their teams and colleagues informed for driving strategic decisions.
Benefits of Digitizing Procurement
Over 60% of organizations do not use tools and rely on legacy systems such as spreadsheets for workflow assignment and supplier relationship management. This number increases to 70% when it comes to risk management, category management, or information exchange. This is primarily because legacy systems do not allow real-time collaboration like cloud-based solutions.
Cost-savings is undoubtedly a major benefit of digitizing procurement. However, digital technologies can offer a competitive advantage to the companies by significantly improving the quality as well as the speed of procurement, reducing supply risks.
With global supply chains becoming more integrated and complex, businesses need to utilise new, innovative solutions that will increase communication and collaboration between stakeholders, improve speed and agility, and reduce the time from purchase orders to invoicing. When you automate purchase processes, your procurement team will reduce the time spent on the invoice payment and utilize it for strategic activities including identifying new, high-quality suppliers.
Overall digitization will not only improve efficiency and productivity in procurement but also enable procurement to play a strategic role in business growth and innovation.
How Can You Make Digital Transformation a Success
Some may argue that digitization of procurement takes too long, is costly, and does not show significant results. The main reason for project roadblocks or failure is that businesses are looking for an off-the-shelf solution that addresses a single pain point. However, the focus should be to find a solution that is end-to-end, user-oriented, and transforms the complete source-to-pay process.
Firstly, you would need a cross-functional team across different departments including IT, finance, supply chain, procurement, etc. Identify the processes that you would want to improve and evaluate the current processes, product or service requirements and suppliers, assess the KPIs, and define the objectives that you want to achieve with digitization.
The additional benefit of software as a solution (SaaS) is that the ROI is measurable and immediate which will make it easier for you to get approvals for digital transformation from the leadership team.
Here is a framework that you can follow.
1) Review: Identify the key business drivers and how these will be impacted by digitization. This may involve revisiting your business strategy, corresponding with the key stakeholders, and consolidating their views or perspectives.
2) Assessment: Identify trends or threats to your existing strategy, assess the internal complaints or customer satisfaction, and analyze your organization’s digital enablement or maturity assessment. You must also conduct an internal change preparedness or readiness assessment.
3) Target state: In this step, define measurable KPIs. Conduct workshops or meetings to develop a solution including constraints, redesign procurement processes and identify the integration between them.
4) Gap analysis: Identify the gaps between your current and target state; prioritize your improvement needs.
5) Business case: Create a roadmap based on your improvement needs that are required to achieve your target state, evaluate cost-benefit and ROI analysis, and develop a change management plan.
Procurement compared to other processes has lagged in the digital revolution. With procurement digitization, you can streamline and automate routine procurement activities, support your team, make the right buying decisions, and create more value for your business.
Induzbuy’s smart procurement management solution is a one-stop solution for your procurement and purchasing needs. With functionalities for vendor management, contract management, reconciliations, etc. you can choose the easy path to digitization! To know more, click here!