Over the past two years, we’ve seen how supply chains are constantly changing and facing uncertainties. CPOs and procurement leaders everywhere are trying to identify ways to be agile to handle future uncertainties.
A significant amount of change has taken place in the procurement function over the past few years. A market that is becoming increasingly complex and volatile has forced companies and procurement leaders to do more with less. Therefore, Procurement teams must identify innovative ways to bring value to the firm in order to accomplish corporate goals. In addition, CPOs and procurement managers should discover new strategies to satisfy their objectives in order to obtain greater outcomes without having to spend more money.
This blog will help you become a better procurement manager by providing you the latest updates on procurement digitization. The latest updates can help you keep up with your industry competition, reduce costs and optimize your supply chain network to improve performance and mitigate risks.
Here are the latest updates on digital procurement in 2022:
1. Digital Procurement Transformation:
The digital age has revolutionized many aspects of life, and procurement is no exception. Procurement platforms have evolved significantly in recent years to better serve organizations’ needs as they transition into a software-driven world where SaaS based technologies can be implemented seamlessly without disrupting existing workflows or processes for employees who are already using these tools successfully on an ongoing basis. However, implementing new procurement processes and technological platforms based on Software-as-a-Service (SaaS) requires thorough planning.
According to the latest PwC global digital procurement survey report 2022, digital transformation is the third most important priority after cost reduction and strategic sourcing. The survey also highlighted that for almost 50% the procurement leaders, digital transformation is a top priority for the next several years.
This is because the pandemic taught the whole supply chain and procurement industry a harsh lesson that supply chain networks need to be secured and maintained well. Hence, the need for digital has become a necessity in today’s uncertain world. Digital not only helps in dealing with the upcoming immediate risks but also helps in the long term procurement transformation.
Although for efficiently planning and implementing a digital procurement technology, the organizations need to have a team that can adapt and think outside the box. But according to the PwC global digital procurement survey 2022, talent management and innovation are not the top priorities of the procurement leaders. This is primarily due to the pandemic which shifted the focus to the more urgent issues such as digital transformation, securing supplies, managing supply chain risks, pricing negotiations etc. However, talent management and innovation are expected to be the long term investments.
2. Risk management and compliance:
The focus of procurement on efficiency and cost reduction has been the norm for decades now, but risk management and compliance have become increasingly important in today’s world. This is largely due to COVID-19 which made risks more visible and the ever-changing regulatory landscape around procurement and supply chain industries.
The digital world has revolutionized many industries and the way businesses operate. The days of a one-size fits all approach to procurement are over. Professionals are implementing technologies that will help them keep up with these new demands. Procurement executives need an agile mindset that can adapt quickly with changing business needs and ever evolving technology, not just for cost savings but also for compliance reasons.
3. Source-to-Contract (S2C), Source-to-Pay (S2P) and Procure-to-Pay (P2P) digitization:
Source-to-pay digitalization has become a must-have for any organization that wants to remain competitive in today’s marketplace. According to the PwC global digital procurement survey, 77% of companies are already equipped with both S2C and P2P solutions. With automation, organizations can improve efficiency and compliance while reducing costs. They can have better visibility into their spending, helping to ensure that organizations get the best value for their money. In addition, digital procurement can help streamline the supplier management process, making finding and onboarding new suppliers easier. These are just a few endless benefits that S2P and P2P digitalization can offer to organizations.
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4. Data: management, quality and value generation:
Data management has long been a problem for procurement departments. Organizations may be unaware of the level of data management required for a digital procurement shift. Data management can have project-wide implications ranging from standard integrations to complicated customization issues. Not understanding the data implications may result in budget overruns, overtime, or scope reduction in data management. Data is a key input for many processes and decisions in modern organizations, and underestimating its relevance can cause an inability to meet goals related to supplier enablement or PO automation due to capacity and scope constraints. Hence, For a successful procurement transformation, data must be prioritized early in any project.
Process digitization is a major driver of data quality as it reduces human errors, increases automation, and prompts greater business insights. With the rise in process digitalization comes many benefits such as improved decision-making abilities due to better-structured information on hand or, even more importantly – value creation from analyzing these records. According to the PwC global digital procurement survey, 82 % of companies with high level of process digitalization are able to generate value from data . Unfortunately, procurement departments that are not digitally mature lack the ability to exploit and leverage data as 75% of the companies with low level of process digitalisation have reported being unable to leverage their data.
Procurement departments are increasingly relying on technology to streamline their operations. However, as Procurement functions become more digitized, they also become more vulnerable to cyberattacks. In recent years, Procurement departments have become more prone to cyberattacks in the form of malware via a software update, attacks on cloud services, ransomware, business email compromise, attack on supply chain, etc. The cyber threats are numerous and can come from many sources such as cybercriminals, vendors, third parties, and even past and current employees. Ultimately, it results in the loss of sensitive data and financial losses for companies. 90% of the PwC survey respondents are concerned about cyber risks, and 27% have already experienced some intrusion.
As a result, it is essential for Procurement departments to implement robust cybersecurity measures. In addition, procurement professionals should be trained in identifying and managing cyber risks, and Procurement systems should be designed with security in mind. By taking these steps, Procurement departments can help protect themselves from the ever-growing threat of cyberattacks.
Building better supplier ties in 2022 will distinguish top firms from the competition. Leaders will gain immensely from enhanced supplier resiliency and stronger cooperation. Businesses must pivot and prepare for these changes by focusing on digital transformation and implementing best-in-class procurement technologies.
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Here are some recommended other readings and plus the link to the new tools: S2P digitization diagnostic tool.