Procurement embracing digital technologies and strategies: survey

For the last 20 years, procurement has slowly been transforming from a tactical, manual process to a strategic digital function. But the transformation is about to accelerate with leading procurement organizations seeing digitization as the future, according to the results of a global survey conducted by the University of Applied Sciences Würzburg-Schweinfurt with support from SAP Ariba.They are investing heavily in technologies that beyond automating things and saving money, can help them drive business innovation, said SAP Ariba.

“The message is loud and clear,” said Karsten Machholz, Strategic Procurement & SCM, the University of Applied Sciences Würzburg-Schweinfurt, co-author of What’s the Next Big Thing in Procurement. “Procurement executives around the world believe digitization is more critical than ever. And they are taking steps to accelerate it within their organizations and increase the value they deliver.”

Machholz joined forces with SAP Ariba to survey more than 450 procurement and supply chain executives across EMEA, North and South America and Asia Pacific.

The study covered all major industries and included blue chip enterprises and mid-market companies alike and found that:

• The journey is just beginning. While 83 per cent of respondents believe digitization will profoundly impact their business, only five per cent have highly automated processes in place.

• Procurement has a conscience. Savings are still their number one priority. But 88 per cent of procurement executives surveyed have higher objectives – such as eliminating forced labour, conflict minerals and poverty from their supply chains – and see the value in helping their companies both do good and do well.

• Things will get smarter and faster. Robots won’t replace buyers, but alongside artificial intelligence and machine learning, they will make them more intelligent and efficient. To this end, more than 60 per cent of respondents plan investments in robotic process automation (20 per cent), artificial intelligence/cognitive computing (17 per cent), machine learning (15 per cent) and chat bots (nine per cent).

Digital transformation isn’t without its challenges. “Within many organizations, insufficient analytics, poor data quality, budget restrictions and lack of talent are creating roadblocks,” Marcell Vollmer, What’s the Next Big Thing in Procurement co-author and SAP Ariba chief digital officer, said in a statement.

Among the actions that can be taken to remove them outlined in the study:

1. Don’t just automate, innovate. Use digital technologies to redesign processes and make them work the way they should.

2. Cleanse data and leverage intelligent technologies and predictive analytics to make smarter decisions.

3. Look beyond savings to measure success. Find a purpose – and execute it.

4. Recognize that companies are only as good as the people they keep. Develop a talent management strategy to advance roles, skills and knowledge.

“Over the next 10 years, companies will see more opportunity than they have in the past two decades combined,” Vollmer said. “In embracing digital technologies and strategies, procurement can take the lead in maximizing these opportunities and beyond delivering cost savings and process efficiencies, fuel innovation and market advantage.”

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