5 Keys To Intelligent Procurement
Procurement 4.0 study conducted by PwC with 500 purchasing managers in more than 20 European and North American countries confirms that the shift to digital is now underway in procurement departments.
In line with intelligent technologies and the development of “industry 4.0”, digital technology now offers high-impact tools to support companies’ new business models.
The benefits for the Procurement function are numerous: breakthrough in Purchasing strategies, finer decision-making and repositioning within the company.
Nearly 35% of Purchasing Managers surveyed have digitized their transactional processes and 19% have transformed their strategic processes.
60% of Procurement Managers say they want to carry out a complete digitization programme of their Procurement processes within 5 years to meet the strategic challenges of their company.
However, the maturity of Procurement Departments on digitization is still low: only 16% of the directors surveyed state having a clear vision and roadmap for digitizing the Purchasing function.
You can check our webinar “From strategic sourcing to Procure-to-pay integration” to get the empirical stand point of a Procurement executive at KPMG, Leigh Bowen.
The study identified 5 strong trends in procurement digitalization:
1) Digital technology for a better quality of procurement data
Data quality is the first challenge for procurement managers. 43% say that the first obstacle to a smart purchasing management is the poor quality of information.
As the Procurement department is pivot between suppliers and customers, it holds a powerful amount of data that has to be valued internally, but also with its industrial ecosystem.
The long-term objective of digitization is real-time data integration from the entire value chain from supplier, distributor to customers.
2) A move towards transactions automation: Source and Procure to pay
These traditional solutions for automating upstream and downstream processes have a very positive impact on transaction efficiency by shortening the bidding cycle, improving collaboration with suppliers, increasing the compliance rate of contracts and controlling expenses.
Purchasing managers regard them as the first step to be taken before implementing more sophisticated and higher value-added digital levers.
3) Automation of redundant tasks
RPA (Robotic Process Automation) solutions are increasingly used by Procurement departments.
They automate redundant tasks such as creating suppliers, purchase requests, request for tenders, and invoice and contract management.
These technologies are easy to implement, inexpensive and scalable.
They reduce time spent on low value-added tasks and reduce errors.
4) Artificial intelligence, the buyer’s partner
Artificial intelligence becomes a real partner for Procurement managers.
Uses can be numerous but ultimately quite specific to each sector, or even to purchasing families.
It supports Purchasing managers in their decision-making (“intelligent manufacturing”) by providing “ready to use” analysis.
Some features are worth being mentioned: Supplier performance, Dynamic contract, Risk management, Supplier risk and CSR risk management.
It also allows intelligent task automation such as cleaning suppliers or items data.
Not to mention chat bots, that directly improve collaboration between buyers and suppliers, but also with internal stakeholders.
5) Digital technology for purchasing processes analysis
For audit or internal control departments, intelligent procurement platforms make it possible to improve the quality of purchasing processes and to better control risks.
It makes it possible to analyze and understand the cause of the discrepancies between the processes induced by the use of these tools, in particular to analyze orders regularization, price changes and causes of late payments.
For companies, the roadmap is now clear: it is crucial to develop a digital vision aligned with the challenges of tomorrow – demographic challenges, new economies, increased regulation…
Purchasing departments are now questioning their digital contribution in response to this acceleration, which turns out to be essential to develop solid foundations for long-term sustainability.”