“A successful transformation is never an accident. It is the result of commitment to excellence, intelligent planning, and focused efforts.” And with this thought the Procurement Transformation Summit in Malaysia kicked off.
At the Pullman Kuala Lumpur City Centre, a breakfast roundtable was set-up for C-Level Executives from organizations, including Affin Bank, Boustead Plantations Berhad, Kumpulan Wang Persaraan (Diperbadankan) – KWAP, Gamuda Berhad, Malaysia Airlines Berhad, Agro Bank, Gentari Renewables, and others. Visionaries and thought leaders from Malaysia joined us to provide practical insights, these include:
The forum served as a platform for Chief Procurement Officers (CPOs) and other procurement and sourcing leaders to share their vision about leveraging data-driven insights to create flexible and resilient supply chains. Procurement functions need to build a strong relationship with Tier 1 suppliers and develop capabilities aligned to Environmental, Social, and Corporate governance (ESG) goals. There is an incessant need for going beyond “some-what digital” to “truly digital” operations for business continuity, risk management, and operational excellence. Next-Gen Procurement technologies are driving significant changes in how businesses operate and undertake procurement. Cognitive procurement solutions enabling better decision-making with artificial intelligence (AI), machine learning (ML), and low-code automation capabilities automating tedious, repetitive procurement tasks and activities.
Exploring the challenges for 2023 and beyond
As discussed in EY’s 2022 Global Chief Procurement Officers’ Survey, the following challenges came to the forefront and organizations need to prepare for them in 2023.
About 60% organizations are focusing on managing and reducing costs using procurement transformation and it is closely followed by increasing efficiency. With the goal of reducing costs, many organizations are turning to procurement transformation as a viable means to achieve their financial goals. Not only is it one of the main focuses for enterprises, but its success rate at growing efficiency levels has also been impressive.
Securing the right talent is a challenge for many CPOs, with 44% citing it as a recurring issue. Finding the right talent to join your team should not be a prolonged process, taking strategic steps and leveraging modern tools can make all the difference!
Lack of budget
With digital transformation on the rise, it is startling to learn that 20% of organizations lack the necessary budget required for their transformation initiatives. This comprises of 44% of all global organizations that do not plan to digitize their procurement processes in the next few years. This leaves them behind in a digital business environment-, indicating financial constraints remain a strong barrier to success.
Developing supply chain resiliency
Procurement 4.0 is a modern approach to supply chain management that focuses on increasing resiliency and stability, allowing for enterprises to stay ahead of rapidly changing complexities in their markets. With over 90% of enterprises unable to keep up with changing trends of supply chain complexities, there has never been a better time than now for enterprises across the globe to harness this strategy. This would ensuring greater certainty and sustainability when it comes down to difficult times, such as a pandemic.
Exploring the strategic benefits of procurement digital transformation
Enterprises with successful procurement transformation implementation registered a 15% EBITDA. This can be directly attributed to the improved visibility into spends and reduced errors, making the process more efficient and profitable.
There is over 70% chance of a successful transformation implementation when organizations focus on the human factors involved. Automation in an incremental or staggered manner can provide organizations with better capacity to support strategic decision-making.
Value of Co-Creation
By leveraging a supply ecosystem’s core competences, procurement can drive value creation through conceptualizing ideas and incubating them in the marketplace for global success. Innovation is at the forefront of this endeavor and a wider scale deployment enables it to reach maximum potential.
And finally, the study also noted that over 66% of organizations will be prioritizing digital transformation for Procurement over the next 1-3 years. With these numbers it is easy to see that digitalization is going to rise in 2023 and beyond. Organizations will not only improve their individual efficiency, but also increase competition within the industry by building on their business advantage.
To stay ahead of the curve, 44% organizations that do not have procurement transformation on their agenda for the upcoming years, they need to realign their strategies to match up to the looming competition.
It is time procurement and sourcing leaders have a dedicated strategy for Next-generation procurement. The near-term uncertainty would be a bit easier to tackle if organizations formulate their strategy and identify key tools and resources to achieve strategic objectives.
Click here to read:—>CPO Agenda and Priorities are changing for 2023 & Beyond