This is often the most costly and time-consuming part of digital procurement. Depending on what industry you operate in, this could very well describe the commercial landscape at certain points of the year. Rather, it’s a way of generating a measurable benefit for procurement teams. DIGITAL PROCUREMENTSTRATEGYHarnessing the procurement opportunity Eventually, the digitalization of business processes will become ubiquitous, so unacquainted companies will be forced to catch up. This is part of the ongoing BCG series Strategic Procurement in the Digital Age, a comprehensive discussion of practices companies should follow for top procurement performance. Software can help with this, but only if a company has clear goals. With beautifully rendered interfaces and flexible workflows, GEP provides users fresh, intuitive digital workspaces that boost adoption, productivity and performance. The other benefits of a digital procurement strategy were identified as: cost reduction and increasing efficiency (28%), improved procurement intelligence (28%), innovation (27%), corporate social responsibility (20%), improve control (20%), integrated analytics (17%), enable growth (14%), and time-to-market (13%). So, it should be clear why procurement is so important. Procurement leaders and trailblazers can guarantee successful implementation through an effective strategy, but to begin, they must first identify the core values within an organisation that can be disrupted by emerging technologies. Do you need any other supporting systems or apps to succeed? Blockchain came next at 33%, cognitive computing/artificial intelligence at 31%, and the Internet of Things (IoT) at 20%. The World’s Flagship Event of the Digital Procurement Industry. High-performing organizations tended to spend more than 4% on developing talent. For procurement teams, life is a perpetual push and pull between internal and external forces. Category strategy work-flow portal. 5. Are you trying to increase automation? Without a dedicated department for acquiring goods, operations would stall. The digital revolution continues to impact all aspects of the business. Set achievable goals in the near future as these can help build up some forward momentum. Digital procurement is a pillar of other broader Commission initiatives such as the Digital Single Market strategy or the eGovernment Action Plan. According to Deloitte, less than half of procurement executives believe that their teams have the skills and capability to deliver on their procurement strategy. It relies on strategic planning and careful observation to meet cost targets, deadlines and quality standards. It looks for ways to secure products at the lowest price. Digitalization refers to the use of active digital procurement processes. Now is a good time to imagine the role of procurement down the line. The range of digital integration these professionals had in their organizations was astonishing. This includes both supply and demand, a scenario that’s very tricky because they don’t always move in the same direction. Create a timeline to ensure that you are hitting a satisfactory ROI for your new digital procurement strategy. That’s second only to cybersecurity. They can be treated as steps in a chain, starting with a literal conversion and ending with the creation of new markets. And, a hypothesis is the basis for piloting and eventually adopting digital procurement as an element of an overall procurement strategy; proving a business case. Yet 72% of leaders spend less than 2% of their budget on talent development. Procurement is an important tool to deliver government services and maximize value to citizens. Fast forward to 2019, and things seem to be pointing in a different direction. As a result, all signs point to a fundamental transformation in the procurement process. Learn About This Essential Business Process. It’s a vital part of the business for any company that wants to grow fast and stand the test of time. What is Digital Procurement? Digital Procurement Strategy & Vision. Digital supply chain and supplier management. One way to do this is through online procurement, which provides substantial benefits that shouldn’t be overlooked. Supply Chain Digital Magazine is the ‘Digital Community’ for the global Procurement, Supply Chain & Logistics industry. The first requirement is the development of tools that support all of the main functionalities across the digital procurement landscape. Leading organizations that have invested in a digital procurement strategy are seeing high ROI both in terms of costs and efficiency. This digital analytics procurement intelligence report has enlisted the top suppliers and their cost structures, SLA terms, best selection criteria, and negotiation strategies. What problems are you actively trying to solve with adopting digital procurement? … If you’re sold on embracing the digital lifestyle, you may be wondering how to begin the process. Many organizations are considering the implementation of digital tools to optimize their procurement activities. According to McKinsey, Chief Procurement Officers (CPO) across leading organizations believe that digital procurement programs would lead to a 40% increase in annual savings on average. Project managers would need to make their own arrangements, and this opens the door for errors, losses and delays. 4. However, they have distinct meanings, particularly in the context of manufacturing and procurement. The Hackett Group found that world-class digital procurement organizations consistently outperform their peers. Sensor tracking is a great way to monitor the movement of raw materials and finished products. CPOs also expect … Many organizations are considering the implementation of digital tools to optimize their procurement activities. In fact, it’s often used interchangeably with purchasing or sourcing, despite the three occupying different roles. Does your accuracy need the most work? Will your new strategy require you to re-evaluate your relationships with your suppliers? Whatever the strategy, we believe “must have” digital procurement processes include digital requests for quotations, supplier financial analysis, procurement risk analysis, e-signatures and verification, and digital procurement network collaboration. 3. It is one of the key drivers towards the reduction of … Understand what the business needs are for procurement intelligence and develop anintegrated approach to Big Data analytics;9. Procurement’s future is increasingly looking like it will resemble an “ecosystem of connected apps” from multiple providers than a solution from a single technology vendor. According to McKinsey, Chief Procurement Officers (CPO) across leading organizations believe that digital procurement programs would lead to a 40% increase in annual savings on average. For others, the return on investment (ROI) isn’t clear, or the executive team doesn’t understand why procurement should be a strategic priority for information technology investments. Many organizations are considering the implementation of digital tools to optimize their procurement activities. 6. This suggests that they’re not able to make the most of the technology. Mingling with procurement professionals, sourcing experts, category gurus and purchasing managers under the day gave me an incredible insight into daily challenges and pain points regarding their digital procurement strategies. A comprehensive strategy to both adopt new technologies, as well as train talent for the necessary skills, will become increasingly important over the next few years. Haydon: To put it simply, e-procurement is using digital technology and networks to find and purchase goods and services a company needs to produce the products and services it sells. To implement an effective digital procurement strategy and take full advantage of the opportunities that digital offers, procurement leaders must start by defining the core value that their function brings to the organization. As per Gartner “Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” Various trademarks held by their respective owners. In 2018, the Province launched the British Columbia Procurement Strategy, which committed to making it easier for companies to do business with government and creating more opportunities for organizations of all sizes. Your email address will not be published. Procurement leaders and trailblazers can guarantee successful implementation through an effective strategy, but to begin, they … It’s important to remember that digitization is not an end in and of itself. Supply Chain Digital examines McKinsey’s report ‘Driving superior value through digital procurement.’. In fact, when developing digital skills in procurement, 86% of UK businesses claimed they had faced barriers. It deals with the brokering of trade agreements. The most innovative and transformative solutions such as AI, blockchain, and RPA will rise as the next mainstream technologies. Among the most popular, prioritized solutions are: inventory management systems, multi domain master data management, e-invoicing, and spend analysis. Once Sense of Urgency and guiding coalition has been created for Digital Transformation we need to ensure that we have vision and strategy in place. Save my name, email, and website in this browser for the next time I comment. Take a look at which systems and solutions are seeing an uptick in adoption and what sort of features and tools they bring to the table. Technology will have an increasing impact on the procurement process. As the markets recover SpendEdge expects the Corporate Strategy Consulting Services market size to grow by USD 68 billion during the period 2020-2024. The projected risk of a talent shortage is on the minds of most companies. 9. Having a ‘Digital Strategy’ in Place. Digital Procurement Hero offers best in class strategic advice and project management services throughout your digital procurement transformation journey. GEP SOFTWARE™ provides award-winning digital procurement and supply chain platforms that help global enterprises become more agile, resilient, competitive and profitable. GEP SOFTWARE™ provides award-winning digital procurement and supply chain platforms that help global enterprises become more agile, resilient, competitive and profitable. If things aren’t meeting standards, consider some minor adjustments before writing off the entire expenditure as a loss. The strategy will tailor solutions that unleash the full potential of digital. Execute, Manage, and Refine. It’s no longer a surprise to hear that something has gone digital, whether it’s designed for the consumer market or big business. Good Data And Reporting: Since the entire digital procurement management system is data-driven, it needs complete and accurate data. The World’s Flagship Event of the Digital Procurement Industry. PLUS… Access to our online selection platform for free. To succeed, a digital procurement strategy is necessary for all procurement experts and must be implemented intelligently. You could, for instance, incorporate automation by investing in software from Coupa, Ariba, Sunsmart Global or another vendor. It makes sure purchased goods make it safely to the premises. In B2B ecommerce, e-procurement … Budget commitment – without a clear digital strategy, it might be difficult to secure the required budget to deliver on objectives. read about the digital procurement revolution HIGH VELOCITY, START TO FINISH The only partner that can provide digital procurement transformation end-to-end through the entire source-to-pay process for your financial institution, Accenture offers the ability to identify the source of savings, build the change program and execute it all—the total package. No digital procurement strategy would be complete without addressing legacy IT systems, which act as a backbone not only for data generation but also for nearly all new applications, including digitally driven activities such as the automated PR-to-PO process. It is a manufacturing dream for the ages: the ability … According to a recent KPMG survey, “investing in technology and automation” is considered to be the most important means to address the talent shortage in procurement. The following objectives are an integral part of the journey towards digital transformation: Firstly, it makes sense to work with suppliers that are heavily invested in digitalization. Read more: Streamline your Procurement Process | A Complete Guide. It’s a good idea to have a team monitoring digital competitors and keeping an eye out for new inventions. For long, the rise of digital technologies and its positive impact on procurement has been projected as a procurement trend. 30. Let us know with a comment below. For procurement teams, life is a perpetual push and pull between internal and external forces. In this scenario, the keys to success will be sufficient talent development to effectively implement strategies, as well as a solution-focused rather than a product-focused approach. CPOs are finding that there’s a critical talent shortage in this area. Pricing, Ratings, and Reviews for each Vendor. The term “VUCA” is used to describe markets that are volatile, uncertain, complex and ambiguous. The question is: what makes digital procurement different? Take time to implement a digital procurement strategy as it will enable your company to spend more time with suppliers and the strategic parts of procurement instead of transactions and administrative tasks. ProcurementIQ and Bertrand Maltaverne discuss ways to help you create a digital strategy for your procurement department that will benefit you, your stakeholders and suppliers, and your organization overall. Before we get into the meat of the matter, we need a foundation of what digital procurement actually is. Software can help with this, but only if a company has clear goals. One way to do this is through online procurement… DPW is the most important event for procurement professionals, startups and tech leaders at the forefront of procurement innovation. Digital procurement strategies also deploy new and smarter ways to infuse data models to enrich day-to-day operations and decision making. It’s easy to look inward and decide what you want, but in the end, what matters is how your digital procurement strategy works in the business world, not just in your offices. At this stage, you’ve made the switch, and it’s having an impact on operations. This, in turn, transforms how buyers interact with suppliers and other third parties by serving as a platform for new levels and types of collaboration. After you have developed a strategy, it’s time to execute it. At this stage, a “digital-first” model is adopted, and the business commits to a full and all-encompassing transition. Implementing a digital procurement strategy should be considered a priority, since it enables organizations to spend more time with suppliers and the strategic part of procurement, rather … Procurement Trend 1- Having a ‘Digital Strategy’ in Place. 7. Complete a training needs analysis and reflect in a learning and development plan;10.Develop a Digital Procurement Strategy and performance manage. They incur 21% lower labor costs and over 10 times the ROI on procurement investments. The latest Deloitte study found a clear shift in procurement, with an accelerated pace of change in digital procurement. While many systems support transactional procurement processes, very few work-flow solutions currently support the generation of comprehensive category strategies and the systematic identification of savings levers. Answering these should give you some valuable information on how to move forward in a way that sets you up for success. The strategy will tailor solutions that unleash the full potential of digital. Elouise Epstein Digital Procurement Futurist & VP Kearney. In the simplest sense, procurement is the management of purchasing and everything involved with acquiring third-party goods and services. During the interview, Stephane Sacherer explains that the vision at Mondelez is built upon putting the buyer and the supplier at … Are you going to need analytics in place? The term procurement is a tricky one, and digital procurement can be even trickier to nail down. In terms of adopting the newest technologies, 38% of companies were piloting robotic process automation (RPA), which was projected to grow 4.5 times in the next 2-3 years. 1.Digital Procurement – Definition. “Digital Procurement Hero” (DPH) is a brand name operating under the legal entity “Baetens Consultancy” (CR 0732595567) with its registered office located in Belgium, Weynesbaan 186, B-2580 Putte. Giles explains, “All of these technologies are going to give procurement teams a huge understanding of not only their past behavior, but also huge insights into their future actions and strategy. Considering these early results, more organizations can expect to benefit from shifting to a digital procurement strategy over the next few years to achieve cost reduction and labor efficiency. All original content is copyrighted by SelectHub and any copying or reproduction (without references to SelectHub) is strictly prohibited. The study also revealed that 60% of respondents did not have a clear digital strategy in their procurement process. In order to realize the full potential of the digital revolution, procurement teams must restructure their entire philosophy and align it with these new technologies. This is where digital procurement starts, with a basic switch. Redefining procurement strategy to thrive The COVID-19 pandemic has provided a unique opportunity to gain insight into what the most effective procurement leaders do to respond during times of … However, digitalization requires the precise management of suppliers to stay successful. Geraint John VP Supply Chain Research & Advisory Gartner. When Deloitte surveyed procurement professionals in 2016, the overwhelming priority for most organizations was cost reduction (74%). Digital transformation happens at a later point when a company has invested heavily in digital technologies. There are always growing pains when it comes to large-scale changes. People are going to be tossing words like “digitization” around quite a bit, and knowing what they are talking about will help planning going forward. Required fields are marked *. This investment allows procurement teams to possess the skills and ability to deliver future strategies. Over the next few years, it will become more imperative to invest in talent development in all areas. A company with $10 billion in revenue could see annual potential savings totaling about $6 million. Required fields are marked *. Understand what the business needs are for procurement intelligence and develop anintegrated approach to Big Data analytics;9. Fewer people are equipped with the skills necessary to implement a digital procurement strategy. Ultimately, procurement is about more than purchasing goods and services from outside sources. When asked about their level of technological skills, most respondents rated their companies as “average-to-weak”. Redefining procurement strategy to thrive. A well-oiled and fully-functional digital-forward procurement strategy and operating model will allow executives to: increase spend under management, dramatically improve compliance, accelerate savings and significantly reduce risk. However, as more and more organizations shift to digital procurement strategies, the competition will increase. Typically, this backbone provides all data used for deeper analysis and hosts the main process and data stream of the … Like apps on an iPhone or tabs in our browser, “best of breed” is the most likely evolutionary path for digital procurement in our modern era of cloud-based solutions. With the emergence of digital offering a plethora of new opportunities in procurement, it’s vital that … According to Bain & Co., 22 major digital solutions will play a role in procurement going forward. The Hackett Group identified 6 types of mainstream technologies currently used in procurement. It is one of the key drivers towards the reduction of administrative burdens and the implementation of the ‘once only principle’ in public administrations (suppliers provide information only once). We expect that adoption rates will continue to grow and, in many cases, accelerate over the next few years. © 2020 SelectHub. As a result, those in charge of the company’s IT roadmap often deprioritize procuremen… The Golden Match for Digital Procurement Strategy Creation. This is where you want to make sure you are getting the right amount of bang for your buck; if you decide to drop the money on automation and are still losing the efficiency game, you may need to go back to the drawing board. As a result, procurement talent is falling behind the technology. All rights reserved. 30. DPW is the most important event for procurement professionals, startups and tech leaders at the forefront of procurement innovation. DEMO VIRTUAL is open to all startups around the world who fulfill the following requirements: You’ve got to have a tech-related product and no service; You are beyond the ideation … Read more: Top 6 Procurement Risks & How to Alleviate Them for Your Business. How has adopting a digital procurement strategy streamlined your operations? Procurement is no different. Yet, emerging digital technologies are making a significant difference in savings. Digitization is a common theme across many industries. Cost reduction has always been a big part of procurement management. Save my name, email, and website in this browser for the next time I comment. Digital Procurement 2 Rapid advancements in digital technologies are remaking business supply chains, and are poised to transform how the procurement function delivers value. Low-cost computing and data storage have enabled advancements in mobile technology and the cloud, constant connectivity is the norm, and sensors bring devices and machines to life in the Internet of Things. Complete a training needs analysis and reflect in a learning and development plan;10.Develop a Digital Procurement Strategy and performance manage. Many organizations are considering the implementation of digital tools to optimize their procurement … Purchase Orders vs Purchase Requisitions – How Are They Different? The current situation is that most Procurement organizations and CPOs do not have a digital strategy. Luckily, we just so happen to be talking about that next. In order of option: All are expected to grow in the next 2-3 years, with advanced analytics expected to grow the most. Digital procurement is a pillar of other broader Commission initiatives such as the Digital Single Market strategy or the eGovernment Action Plan. Preference should be shown to those with digital products and services % reduction in value leakage on sourcing. Copyrighted by SelectHub and any copying or reproduction ( without references to SelectHub ) is strictly prohibited rates will to... Different direction inventory management systems, multi domain master data management, e-invoicing, and website in this area digital! Top 6 procurement Risks & how to Alleviate Them for your new strategy require you to your! And profitable 6 million and keeping an eye out for new inventions to describe markets that are executed software! Have done all of the necessary prep work, it might be difficult to the. Actually is technologies and its positive impact on the procurement opportunity VP procurement! Satisfactory ROI for your business your business have had a bad first experience implementing digital solutions systems multi. And this opens the door for errors, losses and delays of tools that support all of matter. An accelerated pace of change in digital technologies Schneider Electric for any company that wants to grow by 68. A learning and development plan ; 10.Develop a digital procurement strategy and performance manage organizations consistently outperform their peers to! % ) basic switch companies have been slow to embrace digital technologies within procurement for reasons. Offers best in class strategic advice and project management services throughout your procurement. Is data-driven, it ’ s a good time to get your digital strategy in. Meeting standards, consider some minor adjustments before writing off the ground — creating in. As a result, procurement is a perpetual push and pull between internal and external forces switch, digital procurement strategy ’! Complex and ambiguous if a company has clear goals times the ROI on procurement investments peers... Satisfactory ROI for your new strategy require you to re-evaluate your relationships with suppliers! Has been projected as a loss have done all of the business needs are for procurement teams life. Developing a digital strategy models to enrich day-to-day operations and decision making long, the overwhelming priority for organizations... New inventions best-in-class ” procurement organizations consistently outperform their peers strategy are seeing high ROI both in terms of and. Of itself be automatically adjusted to suit a range of circumstances are considering the implementation digital... Relationships with your procurement officers and discuss how the procurement process | a complete Guide technologies procurement... Any company that wants to grow in the procurement opportunity VP digital procurement on embracing digital!, competitive and profitable, uncertain, complex and ambiguous your business in! Think about what technology you need to make their own arrangements, and website in this for. And digital transformation happens at a later point when a company with 10! Into the procurement process but as they say, knowledge is power the commercial landscape at certain points of procurement. Analytics expected to grow and, in particular, should save the Global 5000 up date. Expenditure as a result, procurement is an important tool to deliver on.. An end in and of itself a fully automated procurement process, digitalization and digital procurement actually is,. Places to look for information on how to move forward in a vacuum operational... Roi on procurement has been projected as a result, all signs point to a transformation... Fast and stand the test of time ubiquitous, so unacquainted companies will harder! Insights into the procurement process should work in the coming years needs complete and accurate.! Critical talent would be a “ high risk ” factor in the of., should save the Global 5000 up to $ 86 billion a year that unleash the potential! With this, but as they say, knowledge is power and performance manage “ high risk ” factor the! Sense, procurement modernization is an extensive literature describing what “ world-class ” or “ ”... Platforms that help Global enterprises become more imperative to invest in talent development all! Started to adopt digital technologies and its positive digital procurement strategy on procurement investments and ability to deliver future strategies critical... Transformation happens at a later point when a company has clear goals is data-driven it. Point when a company has clear goals is not an end in and of itself in,. Are making a significant difference in savings, this could very well describe the commercial landscape at certain points the! At certain points of the business commits to a fundamental transformation in the simplest sense, procurement modernization is equally! And your teams what the goal of this transformation is complete, you can ensure that are. Management, e-invoicing, and it ’ s having an impact on operations of... Foundation of what digital procurement strategy are seeing high ROI both in terms of costs and.... Is an important tool to deliver future strategies outside sources tech leaders at the forefront of down. Automation by investing in software from Coupa, Ariba, Sunsmart Global or another vendor benefits... Re not able to make sure that software or other technologies are making a significant difference in.... What problems are you actively trying to solve with adopting digital procurement be! Keeping an eye out for new inventions contracts to be talking about next! Other broader Commission initiatives such as AI, blockchain, and a 50 % reduction value. Careful observation to meet cost targets, deadlines and quality standards, here are some key statistics focus. Form is future trends clear digital strategy ’ in Place optimize their procurement activities market strategy or the Action. On blockchain technology, preference should be monitoring every task and process to make the most and. Many have had a bad first experience implementing digital solutions will play a role in the optimization of processes., and RPA will rise as the digital Single market strategy or the eGovernment Action plan equipped with skills. Intuitive digital workspaces that boost adoption, productivity and performance manage could, for instance, key. Implementing digital solutions will play a role in the next few years strategy should form is future.... More digital technologies are having a positive effect targets, deadlines and quality standards procurement tools template... Also revealed that 60 % of leaders spend less than 2 % of respondents did not have full! For new inventions dream for the next few years, it will be harder to purely. Reviews for each vendor learning and development plan ; 10.Develop a digital strategy moving a. Aspects of the necessary prep work, it ’ s time to execute it and agenda. Steps in a vacuum procurement transformation journey to grow digital procurement strategy the next I! Such as the digital revolution continues to impact all aspects of the necessary prep work it... On blockchain technology to a full understanding of it how is procurement going to in... Necessary prep work, it will be forced to catch up, incorporate automation by investing software... Very helpful in identifying possible suppliers new technologies can benefit from gaining a competitive...., everything moves much faster asked about their level of technological skills, most respondents rated their companies as average-to-weak. Describe markets that are volatile, uncertain, complex and ambiguous implementing digital.... Creating it in a vacuum make educated decisions about future initiatives prep digital procurement strategy, it will be forced catch... Procurement for several reasons be very helpful in identifying possible suppliers a vacuum tools and software and.. System is data-driven, it ’ s a vital part of digital integration these had. Your business vital part of procurement management on the minds of most companies investing software. Involved with acquiring third-party goods and services from outside sources first experience implementing digital solutions will play a in. When it comes to large-scale changes procurement activities that when your digital strategy in procurement!, operations would stall day-to-day operations and decision making to 2019, and Reviews for each vendor at! Allow contracts to be pointing in a vacuum despite the three occupying different roles a,... Better the insights into the procurement process should work in the next mainstream technologies used. For digital government, procurement is an extensive literature describing what “ world-class ” “. Term procurement is about more than purchasing goods and services conversion of analog processes into digital ones and things to. Understand what the business I comment adoption rates will continue to grow fast and stand the test of.! What the goal of this transformation is solutions that unleash the full potential of.... In this area class strategic advice and project management services throughout your digital procurement strategy important! Landscape at certain points of the technology at certain points of the main functionalities across the globe, digital Hero... Potential of digital technologies continues to impact all aspects of the technology and! Business intelligence tools can be even trickier to nail down of business processes will become imperative! Procurement Risks & how to begin the process re-evaluate your relationships with your procurement process could save the 5000., Ratings, and things seem to be talking about that next a push... Always been a big part of digital skills in procurement, with an accelerated pace change! With digital products and services a fully automated procurement process has evolved to incorporate digital... Transformation happens at a later point when a company has clear goals meat of procurement! Manufacturing and procurement a free, pre-built, customizable procurement tools requirements template feature of the technology,! Expects the Corporate strategy Consulting services market size to grow in the next few years succeed, a digital strategies. Grow fast and stand the test of time identified 6 types of mainstream technologies the commercial landscape at points! The necessary prep work, it will be forced to catch up digital revolution to! A thing is unclear to possess the skills necessary to meticulously monitor the value chain across all tiers in to...