Why digital procurement needs to be on your radar?
21 October 2021
Digital transformation has been ongoing for many years across multiple industries. The supply chain industry is no different and digitisation has been the name of the game for some time. But how does this digitisation work and why is digital procurement a disruptive technology that needs to be on the radar of any supply chain executive?
Benefitting from digitisation
Digitisation seems to be one of those buzzwords that get thrown around indiscriminately. At its core, it means companies aim to create a completely integrated sequence of planning and production solutions that work closely together to create a more visible supply chain. The result is a supply chain that is more responsive, agile and transparent – important attributes at a time when global supply chains worldwide are faced with disruption from the COVID-19 pandemic.
Key benefits of digitisation include improved operational efficiencies, lower production costs, quicker lead times and more transparency across all touchpoints in the value chain. It allows supply chain companies to take complete control of their data estate, allowing them to manage relationships with a multitude of partners and gain greater capabilities to review and share large amounts of data in real-time. Ultimately, this means businesses can create better demand planning strategies, which can offer a major competitive advantage.
How does digital procurement come into play?
Procurement is the management of all purchasing of third-party goods and services. It involves trade agreements, searches for the lowest price, managing cash flows, and overseeing the logistics of purchased goods. Digital procurement is in fact one of the outcomes of digitisation. It means that all of these previously done manual processes are now automated or facilitated by systems.
So what does digital procurement offer companies that have adopted it? The use of digital processes generally makes life easier for procurement officers, by creating a more user-friendly environment to manage procurement and automating tedious tasks. It also improves decision-making by working in tandem with forecasting tools and can help companies become much more agile. Lastly, it is undeniable that digital procurement cuts costs by streamlining operations and reducing errors.
Key technologies used in digital procurement
Some recent developments in digital procurement have focused on introducing artificial intelligence in procurement systems, for instance, by using machine learning to recognise errors and categorise spending. Meanwhile, blockchain is being leveraged to create trusted digital transaction ledgers, which help to verify and validate transactions.
But it is not all cutting-edge technology that is being used. For instance, recent innovations have also focused on visualising and analysing data. Companies are also increasingly signing up for fairly basic platforms that help bring buyers and suppliers together and can maintain information that helps with the visibility and traceability of the supply chain.
Digital procurement is a capability that is continuing to evolve as new technologies emerge and others mature. It is a very worthwhile exercise for any company to keep abreast of the latest innovations as increasing efficiencies in digital procurement generally greatly impacts the bottom line of a company.