This guest blog comes to us from Megan Ray Nichols of Schooled by Science.
Procurement’s evolution is occurring more quickly than ever as organizations in every industry move into a digital era. That’s a blessing and a curse. On the one hand, digitization promises to make processes more efficient and insights much easier to generate. On the other, the promise of all those benefits sometimes gives Procurement’s unrealistic expectations. Many teams forget that they’ll it requires adoption by all involved parties, including partners and vendors.
When making an argument for digitizing processes and systems, procurement specialists will almost always contend with a certain degree of resistance from other stakeholders. It’s important to remind them that – after a digital transformation – data will become the new fuel of the organization, influencing every working facet of the business – not just Procurement.
Why Digitize Procurement?
Historically, the procurement field is behind the curve when it comes to adopting many newer, data-driven solutions and technologies. Lately, more organizations have begun to realize the value of digitization and now have some plan of action either prepared or already in motion. The majority of businesses expect they’ll realize a full digital transformation within the next several years.
The swath of data that becomes available as a result of digitization means vastly improved opportunities and productivity. In a time when the competition is increasing exponentially, digitized and more informed spend management solutions could offer savings anywhere from 5-25%.
Data that was previously unavailable or unknown suddenly becomes transparent for all. Analytics tools can help parse and extract more in-depth insights to inform future operations. Plus, with the right solutions, an entire network of procurement platforms can be automated and simplified.
While digitization certainly sounds promising, it’s not an easy transition to make. Here are some essential things to keep in mind that will help during the digitization process.
1. Efficiency Is King
For the most part, innovative and technology-oriented upgrades will provide a series of productivity improvements that warrant the cost of adoption. These efficiency improvements signal the true value of digitization. Therefore, every plan, event and change must push the operation toward a faster market-to-cash cycle.
If those improvements aren’t happening, then the team needs to return to the drawing board. Digitization is highly beneficial, but there are a lot of moving parts, and things can go wrong. Some changes may not be worth the buy-in, depending on the value that’s returned — in this case, how much efficiency improves.
2. Improve What You Can
Before deploying a large-scale digitization strategy, it might be better to start small and experiment with existing processes. It not only helps you learn the ins and outs of technology, but also shows what customization options are available.
For example, procurement audits come with the territory and are necessary for smooth operations. Why not develop a system that ingests related data and performs a continuous, real-time review throughout the scope of a project? Big data technologies and machine learning are more than capable of handling such a thing. Review the audit process to see where you can implement new technologies to streamline the process.
3. Self-Service Will Improve Data Management
One fantastic element of data-driven and modern technologies is the opportunity to automate and simplify complex operations. Real-time data can inform a controls system the entire way and allow for more nuanced adaptations. With the help of machine learning and AI, procurement systems can be heavily automated.
Automated networks are more about simplifying tasks and opening up self-service opportunities. Buyers and suppliers want to see easily integrated systems, with comprehensive access, that guide them through the process without considerable input.
The solutions provide a single interface or platform for conducting business and also compile all interactions and relationships. This allows for a more organized and better-managed system.
4. Set Your Priorities
Digital procurement solutions are powerful tools, but they’re also often overwhelming. The market is so broad, solutions o robust that you need to choose a focus as early as possible and stick with it. Select what processes and systems you’re looking to improve upon and know what kinds of tools you’re going to use to get there.
The general approach is to use massive amounts of data to inform operations, but there are so many tools and solutions on the market that will do this. It also means you should be looking at opportunities for improvement, as opposed to merely choosing a device based on its reputation or features. The items should always complement the upgrades you’re looking to make, not the other way around.
5. Give It Time
As you transform existing processes and apply new solutions or technologies, the organization will start to realize some change. However, not everything is going to happen overnight. It takes time to see an investment not only come to fruition but also to generate returns — and the same is true here. It will take some time to create value through digital and data-driven processes. Out of 91% of German manufacturers that have invested in digitization, only 6% consider their operations entirely digitized.
The downside to it is that it will also take time to see whether or not a strategy is lucrative. It may take even longer to make adjustments. That’s why planning out a digitization strategy well in advance is always necessary.