Five Precepts to Digital Procurement Transformation
Industry 4.0 business is upending the traditional ways in which procurement has been operating so far. With a plethora of opportunities that 4.0 presents, procurement can now prove itself of immense value within an organization as a trusted business advisor and strategic partner. Besides expedited productivity and increased savings, procurement can achieve so much more with the transformative power of digital capabilities offering advanced data and analytics to build new business models, help businesses run lean, be agile and responsive to customers and stakeholders. Gone are the days when procurement would be delimited to a more tactical persona than strategic which is incumbent of an organization’s holistic growth.
Talking about holistic growth, it reminds of the moral principles of Buddhism; the five essential precepts to guide every Buddhist toward a more transformative living! It is the season of Vesak and if we are to renew our strategy to render procurement a digital transformation, wouldn’t it be nice to have similar precepts to welcome change? So to realize the benefits of digital procurement, here are the five precepts or commitments that you’d have to focus on-
At the helm of digital procurement transformation is data. Data informs your prediction about the needs of people from identifying goods and services that are available to the best suppliers that are capable of offering the same at the best price. Procurement companies are already extracting a lot of transaction information or line-item data but that is not enough. To make your prediction formidable, you’d need to extract external or third party data (deep and broad category and market intelligence) along with contextual data (requisition review and approval, contract set-up, or the RFP process). Consider requisition review and approval, contract set-up, or the RFP process as examples of data that must be sought.
Futuristic technologies like AI, natural language processing, analytics, and bots are no longer a hype but reality. The irony is, to get initiated on these advanced technologies, one needs to get initiated on simpler technologies such as process automation, SaaS products, integration etc. In digital procurement transformation, technology is invincible and imperative to deal with the kind of unstructured data you are required to fetch for advanced, intelligent reporting. In procurement, this is particularly helpful for sourcing events or spot buys where a complex model is based on the sourcing and buying history of the items, supplier performance, ratings, pricing, etc.
How would you reap the benefits of digital procurement if the user experience isn’t crafted efficiently; attractive and intuitive enough for its users? Stakeholders feel invited to explore digital capabilities basis the effectiveness of the software in buying and generating useful data. So when you select your source-to-pay suite, remember the importance of an integrated dashboard and customized bots that’ll run your orders at a single click. Innovative user experience is the third precept to a successful digital transformation of procurement. Without it, not only you are unjust to the data you have sourced and technology you’ve invested in, you’ll also disappoint the whole intent of going digital as users wouldn’t be ready consumers; you’ve to attract them to consume your efforts.
In the domain of procurement, your intent of digitizing the practice requires people who see value in it and who can better it through their day-to-day engagement in practice. Besides data, technology, and user-friendly innovative design, the fourth precept for a successful digital procurement transformation is a cross-functional team of people with varied skillset including data scientists, AI experts who can manipulate algorithms, category managers who can advise on applicability, and IT professionals—the purveyors of integration with command over what necessary infrastructure is required to make a seamless integration of a solution to a problem. In this entire restructuring of your talent pool, do not miss out on design engineers.
Policies, Procedures & Operating Models
The fifth and the final precept of digital procurement transformation is to review your procurement policies, procedures, and operating models. From stakeholders internal to an organization to external participants such as suppliers, the need that digital procurement fulfils is the creation of a unanimous platform that facilitates superior collaboration and interaction along with access to data that is robust and insightful. This way, each participant is aware of his/her roles and responsibilities and how their decisions would be considered at the best interest of their organization. Do not be surprised if a review demands a complete restructuring of existing policies and procedures to welcome a wholly new operating model in tandem with the objectives of your new digital transformation.
Wishing a great new beginning to your procurement practices & Happy Vesak!