How to Lead a Digital Procurement Transformation
How can leaders meet today’s sourcing demands and reshape buying for the future of purchasing?
Procurement leaders are engaged in a balancing act: navigating ongoing short-term response to the pandemic while building processes that support long-term strategic goals.
As a result, there has been an accelerated shift to online purchasing and e-procurement solutions in the last twelve months. And it’s a shift that looks set to continue — according to a recent study by DHL Express, the global B2B e-commerce market is now expected to grow by more than 70% (to $20.9 trillion) by 2027, and by 2025, 80% of B2B sales interactions between suppliers and buyers are expected to occur in digital channels.
So, if digital solutions are the future of B2B purchasing, what should you prioritise today to help your team reach its long-term goals?
In conversations with procurement leaders in the UK—including over half of the FTSE 100—three priorities have emerged as common areas where leaders are innovating to meet new employee and customer expectations, and to position procurement as a value driver in their organisations far into the future.
1. Be proactive in the shift to digital
Nearly two years into the global pandemic, it’s not enough to simply maintain business continuity. Procurement must drive operational efficiencies while meeting increased demand. In the What Next? research report from Procurious, respondents observed the increasing pressure to update organisational priorities in light of these global disruptions. CPOs prioritising only cost reduction and risk management may create tension with business partners’ desire for speed of supply. Buyers can’t afford to spend time sourcing low-value items and dealing with complicated contracts when their time is in high demand.
The benefit of digital solutions is their ability to automate manual tasks and to make teams and organisations more efficient. Technology solutions have become a primary investment for procurement teams, especially as supply chains grow longer, more integrated, and more complex. Much of the success procurement departments have enjoyed over the past several years, including their seat at the table in high-level strategy sessions, can be attributed to strategic technology investments.
In a 2020 survey, Deloitte found that 64% of CPOs surveyed have shifted from ‘defence’ to ‘offence’ mode, focusing on adapting their supply chains to thrive in the next normal.
Strategies that are responsive, not reactive, will set up your organisation for long-term continuity of plans.
To achieve this forward-focused vision, teams can’t wait to digitise. Deploying digital technologies should remain a priority to enable the transformational change required in this new, post-pandemic age of buying.
2. Increase efficiency through intelligent technology
Across business operations, the use of technology allows for automation and streamlining of processes. New technology and tools like artificial intelligence (AI) and machine learning (ML) can help to increase efficiency and reduce costs. Routine and repetitive processes are now turned over to AI and ML to optimise spending.
A 2021 survey of procurement leaders and CPOs by WBR Insights found that procurement teams have made advancements in their deployments of intelligent technologies. On average, most procurement leaders surveyed are investing 50% of their budgets in future technologies such as artificial intelligence, machine learning, robotic process automation, cognitive procurement tools, and more.
3. Design procurement to enable sustainability
With increasing evidence of the impact of humans and businesses on climate change, enterprises are becoming more cognisant about sustainability. Earlier this year, 39% of 250 surveyed business buyers said that improving sustainability was their top procurement priority this year. What’s more, the latest research from Procurious revealed that procurement leaders with advanced sustainability programs were more than twice as likely to report an increase in sales and improved product and service quality.
PWC recently found that companies are increasingly including Sustainable Development Goals (SDGs) in their business strategies. A 2019 survey of more than 700 global companies found that 72% reference SDGs in annual corporate reports.
While individual companies can – and are – making a difference, it’s critical to acknowledge that no organisation operates in a vacuum. Being committed to sustainable procurement requires diving deep into the supply chain, and integrating new policies, processes, and partnerships.
If you’d like to learn more about how to turn procurement into a value driver in the digital age, you can register for the 3rd annual Amazon Business Exchange free virtual event, here.
