Given the multitude of challenges that procurement professionals face, teams have to be ready to expect the unexpected in the industry. In dealing with the current crisis, the most successful organizations to emerge at the other end will likely be those that moved quickly to digitize much of their procurement operations and provide employees with the right procurement technology and eSourcing software to reduce their current workloads while preparing for the disruptions that are as of yet to come.
While it's difficult to pinpoint the trajectory that procurement's digital transformation will have to take to help organizations survive or even flourish during these rapidly evolving times, one sure thing is the next stage in the journey is looking increasingly toward best-of-breed solutions. According to research from Procurement Leaders, 48% of respondents to a survey who currently operate with a single-suite model are aspiring towards a best-of-breed approach, with interest in the adoption of these systems having increased markedly in the past number of years.
However, this shift does not necessarily mean that suite providers will no longer be integral to the organizational ecosystem in procurement's future roadmap. But even with the growing appeal of new solution providers, procurement's digital transformation still has some way to go, having been hindered by lagging adoption, company cultures that don't fully embrace procurement transformation and an overload of data for teams to sift through.
Often, small but significant steps can be vital to elevating organizations' procurement functions into the next stage of their digital transformation:
Diverse Toolsets Can Help Meet Diverse Objectives
Just over a decade ago, full suite providers were advocated as the go-to solution provider for the problems facing procurement teams regularly. As such, businesses tended to choose and stick with just one. But in reality, many providers failed to deliver on that promise. Today, the niche innovation needed to solve modern procurement problems is being captured by the new players on the market.
Within businesses that have spent several years deploying heavy, multimillion-dollar ERP systems, many practitioners are now at the point where they're asking themselves: "Am I going to have to spend more millions of dollars to keep upgrading this system, and am I getting the return / the insights / the data-quality I need to drive my business forward?"
With the growth in the number of cloud-based solution providers and increasing availability to integrate via APIs, it's become much more possible for organizations to operate an ecosystem of best-of-breed solutions at a reasonable cost rather than paying the operational costs for just one provider.
Focus on The Processes That Extract The Most Value
On the other side of the digital transformation coin, a side effect of the increased levels of technological innovation within the space is a growing sense that there now are more solutions than problems. This has resulted in some organizations struggling to decide which problems to prioritize and which sourcing solutions to pilot at scale.
To alleviate this confusion, you should examine past processes to identify where you have extracted the most value, simplify what you're to get done (increase savings? Boost sustainability practices?) and then get curious about some of the new technologies that could propel your business forward.
Data Is A Tremendous Resource If Used Effectively
Along with many new solution providers, some pressing questions around the ever-increasing burden of data bearing down on procurement teams have come to the fore. While having a flood of different data sources – from sustainability to benchmarking and various other dimensions relevant to decision-making – can help businesses, there hasn't been a proportionate increase in the ability to reason at scale about this flood of information.
In the words of Keelvar CEO Alan Holland, "how you deal with that effectively and how you marry those trade-offs to your corporate policies and objectives; that's the crux of the challenge for many businesses now."
While it would be unfair to man individuals with gigabytes of data across varying business dimensions to pick through, this is where intelligent procurement automation comes in. For example, when your business is deciding which suppliers to contract with and has access to granular data on supplier performance about CO2 emissions, as well as rates, by using Keelvar's sourcing optimization products, you can automate reasoning about how to assess trade-offs and bias in favor of one dimension over another.
Company Culture is Critical to the Success or Failure of Technology
If data is the 'new oil' when gathered and processed correctly, then procurement digitization means it has the potential to have a staggering impact on a company's competitive advantage. But if an organization's culture doesn't embrace the new technology and doesn't get buy-in from the teams expected to use the tool, then it is doomed to fail.
Education about the value that a new solution will bring -- not only to the organization but to the employees themselves -- is a factor that is sometimes overlooked or miscommunicated, leading to concerns that adoption of technology such as Artificial Intelligence will eventually equate to lost jobs for procurement teams rather than affording them more time to focus on creative tasks and strategic functions.
To drive a buy-in mindset when adopting new technology:
Consider The Benefits That Using AI & Automation Tools Could Bring
While modern esourcing tools and techniques have yet to be used to their fullest potential in part due to adoption problems, the next generation of up-and-coming procurement leaders in the workforce is increasingly rejecting old applications and systems and pushing the business case for modern, user-friendly tools.
And although AI and Machine Learning will not be the silver bullet to solve every problem in procurement, it is hugely complementary to human worker capabilities; in some instances, Keelvar customers have reported time and productivity savings of up to 93% using our automation solutions for ocean sourcing.
This shift within the space towards automation should be seen as a positive step. Not only will it lead to the automation of mundane and routine tasks, reduce risk in negotiations and increase cost savings, but it will also allow organizations to tap into the transformative time-saving potential of AI, which can operate and react around the clock 24/7 to supply chains challenges: even the ones that procurement teams aren't expecting yet.