Blog series: Procurement as a value driver

Typically, procurement organisations spend a significant part of the work effort within operational tasks. At the same time, it has become obvious that procurement plays a significant role in managing risks in the supplier base while having the pressure to improve cost efficiency. In this second part of the blog series, we discuss how digital transformation supports procurement organisations in these tasks and creates value for the whole organisation.
 

The changing environment is forcing procurement to shift focus and improve capabilities

In an era marked by unprecedented global challenges, procurement organisations find themselves navigating a complex landscape. The expectations placed upon them have evolved far beyond their traditional role of cost optimisation and supply chain management. Today, procurement professionals are tasked with addressing a multitude of challenges, ranging from ensuring the continuity of supply to fostering sustainability within the supplier network. 

Moreover, they must do all of this while making sure that they are operating cost efficiently. 

As we reflect on the events that have unfolded in recent years, ranging from the global pandemic of 2019 to geopolitical conflicts and rising inflation, one truth has become clear: the need for procurement organisations to strengthen their abilities and adapt to a rapidly changing operating environment is more important than ever before. The success of businesses is now dependent on their procurement strategies going beyond the conventional, embracing innovation and proactively preparing for diverse challenges on the horizon.

The Deloitte 2023 Global Chief Procurement Officer Survey brings into focus a critical strategy that leading procurement organisations are leveraging to deliver value and strengthen their positions in this dynamic operating environment: digital transformation. The survey reveals that digital transformation is emerging as a top-tier strategy for procurement professionals. These organisations are prioritising the maturation of their digitisation efforts, recognising the value it can unlock while also helping them navigate through the challenges. 

Releasing procurement from operational tasks

One of the key benefits of digital transformation is that it releases procurement teams from time-consuming operational work, allowing them to focus on more strategic activities like supplier collaboration. To achieve and enable this, procurement organisations are standardising their processes, policies, systems and data. They are also using flexible automation tools, such as low-code or no-code platforms and self-service solutions. Additionally, agile methodologies are being used for iterative design and the realisation of digital solutions.

High-performing procurement organizations are effectively leveraging digitisation to automate tactical work and create agile, scalable and digitally enabled procurement operations. 

This not only enhances responsiveness and processing accuracy but also frees up valuable time for strategic stakeholder and supplier relationship management activities.
 

Insights and risk mitigation with the help of artificial intelligence

One of the features of digital transformation in procurement is the utilisation of advanced analytics powered by artificial intelligence (AI). By analysing big datasets, AI tools enable procurement professionals to identify trends and patterns that would be nearly impossible to identify otherwise. This capability affects many of the procurement processes, from supplier selection to contract negotiation.

AI helps procurement teams spot and deal with possible problems early on. It does this by giving real-time updates on suppliers, orders, inventory, contracts and more. AI also makes work smoother by automating tasks like handling orders, creating invoices and managing contracts. 

What is the outcome? Better response times, better work quality and fewer mistakes, all of which help make procurement a more important part of the organisation’s strategy.

In conclusion, digital transformation is no longer a buzzword but a powerful driver for change in procurement. As organisations navigate the challenges of our rapidly changing world, those who invest in digital transformation will thrive, harnessing the full potential of advanced analytics, AI and RPA to drive value, enhance efficiency and proactively mitigate risks. The future of procurement is digital, more agile and resilient, with a greater strategic impact.

In case your procurement organisation needs a boost in taking a step towards digital transformation or bringing digital maturity to next level, give us a call and let’s talk.