Published on June 19th, 2019 | by Samantha Wallace0
Ways In Which Technology Is Transforming Procurement Operations
Buzzwords such as digital transformation are having a significant impact on supply chain management. Although this department within many businesses, across various industries, is still very people-driven, there’s no denying that technology is changing procurement and commerce.
What is a digital-first strategy? It’s the simple basis of founding a strategy on a digital solution rather than looking for a digital alternative. Without most business persons realizing it, digital-first strategies have become the preferred method of problem-solving. People immediately look for a way that technology can make a problem go away.
With commerce, it’s easy to see how digital-first strategies have led to some very successful companies such as Amazon. Using AI, predictive analysis, and cloud-based solutions, many companies make it easier for customers to make purchases, access their customer records, and more.
But when you look to the edge of the business, it seems like B2B sales and procurement are a little late to the game. Technology might have facilitated some of the processes when it comes to procurement, but it does seem like there’s a good hold on the human element in this business function. That is starting to change.
Taking traditional procurement strategies and giving them a digital-first spin, companies are seeing more success than ever. Technology is making it easier to keep purchasing in line with company objectives and complying with legal restrictions or regulations.
Procurement and Data Science
Data science is always a hot topic, and when you put it into a business sense, it’s not often paired up with procurement. Procurement teams and procurement based companies, however, are starting to see that a meaningful dashboard can detect patterns well before a person can.
Using machine learning a procurement team could take otherwise unorganized data and detect actionable patterns. So, what is the overall effect?
Data science is making forecasting for procurement teams more accurate than ever. Teams can cluster data automatically based on preset standardizations and benchmarks. Punchout procurement companies are exceptionally benefiting from this jump in data science as they can make strategic purchase offerings in their catalogs.
Ideally, this interdependence between procurement teams and data science will continue to grow. Although it seems like so much of procurement could be automated, the human element is vital in that environment.
Procurement systems that rely heavily on technology can manage company spending, contracts, and vendor relationships at a much higher level.
The baseline expectations of procurement teams are still in place. A procurement team must reduce costs while maintaining or improve the quality of goods. Ideally, data science will help teams think outside the box an implement best practices quickly.
Disruptive technologies are not at all what they seem. Robotic process automation or RPA is the primary technology on the table in this section. Ideally, disruptive technologies will reduce disruptions in procurement and commerce, affecting both ends of the supply chain system. An RPA should be able to automate routine tasks and drive processing based on business logic.
Essentially when you’re working with a scripted RPA, both the user and the host should experience higher levels of automation. That doesn’t mean that robots will be taking over, far from it.
The introduction of disruptive technology is the sign that both AI and Machine Learning are becoming realities. True artificial intelligence and genuine machine learning are still years out into the future. But the technology that we have now shows that these concepts are possible, and their execution is sufficient.
For example, many procurement systems are now cloud-based and rely on machine learning for efficiency. They are able to offer budget report in real-time and can assist customers in making smarter purchasing decisions. As a consumer looks at a catalog now, they have access to a wealth of information about the products available, and ten years ago this wasn’t possible.
Compensation for Talent Shortage
Everyone’s talking about talent, right? The talent shortage isn’t just impacting Silicon Valley where it seems that the surge of tech-capable innovators is finally slowing from a flood to a drizzle. Many areas within the inner-workings of business function are seeing a vast talent shortage as younger people entering the workplace assume that these jobs use automation.
Supply chain professionals are retiring at a much faster rate than people are entering the field. In a strange turn of events rather than more people entering the field to fill this gap and take advantage of the opportunity for employment, the talent available is changing the landscape of procurement.
As people enter this field, they see the opportunity for employing disruptive technology to fill the talent gap rather than focus on finding new people. Although this seems to set the scene for a rough couple of years, the companies impacted are setting the standard for strategic thinking and innovation. They are seeking talent that is as determined to provide problem-solving and leadership skills as the talent they have currently that use digital-first strategies to fill the current gap.
Essentially, companies are no longer looking to hire procurement professionals simply because they can develop quality vendor relationships. They’re looking for exceptional sourcing strategies that deliver a significant impact.
The consciousness of Supply Management
When you start evaluating where your procurement and commerce teams are currently it’s likely that you’ll see a few performance gaps. Whether it vendor development or customer management, you can find a digital-first strategy to start closing these gaps and becoming more efficient.
Technological advancements are helping companies run leaner without loss of awareness to their immediate situation. As data becomes easier to access and understand, teams can divert their attention to areas that need improvement or slight tailoring. Using technology does not mean that the team is no longer necessary if anything, it allows your teams to spend more time on vendor management and risk analysis.
Being aware of the technology impacting procurement is the first step in staying ahead of this ever-changing environment. Technology will continue to advance, and your business must keep up with the times.