By: George Mathew
The emergence of disruptive technologies such as mobile computing, cloud computing, constant connectivity, and sensors that enable devices and machines to form the Internet of Things is opening up new possibilities for the supply chain. These technologies are enabling procurement to offer even more strategic value. Digital procurement is a game-changing shift that allows organizations to deliver on their main mission with fundamentally different processes at a reduced cost. To embrace and nurture these new capabilities and meet heightened expectations, new operating models, organizational constructs, talent, and metrics will be necessary.
It is crucial to understand that certain core technologies are essential for any procurement function to function effectively. However, there are also disruptive technologies for digital supply chain management that fall into the categories of Maturing or Emerging. Procurement leaders should prioritize investing in digital capabilities that are Maturing and gaining momentum among highly capable procurement organizations.
How digital technologies can transform the procurement function?
Digital technologies have the potential to significantly transform the procurement function. By leveraging digital capabilities, organizations can streamline and automate various procurement processes, such as supplier selection, contract management, and purchase order processing. Advanced analytics and AI-powered tools can enhance decision-making by providing real-time insights into supplier performance, market trends, and cost optimization opportunities. Additionally, digital platforms enable seamless collaboration and communication between procurement teams and suppliers, improving efficiency and reducing manual errors. Overall, digital technologies empower organizations to achieve greater transparency, agility, and cost savings in their procurement operations. The digitization of the supply chain creates a continuous flow of data, information, goods, and services between the physical and digital worlds, which includes procurement as well.
How digital supply networks can improve procurement processes?
Cognitive computing and artificial intelligence solution:
A cognitive computing and artificial intelligence solution can effectively handle multiple, unstructured, and disparate sources of spend information. It has the ability to read, interpret, and recognize the relevant information needed to create a consolidated record of supplier spend. Furthermore, this solution ensures that the record remains updated over time, providing organizations with accurate and comprehensive insights into their spending patterns and supplier relationships. By automating this process, businesses can save time, reduce errors, and make more informed procurement decisions.
Intelligent content extraction solution:
Managing a large number of contracts in hard-copy or PDF format can be challenging as valuable information such as terms and conditions, indexed pricing, and penalties may remain inaccessible. However, an intelligent content extraction solution powered by machine learning can address this issue. By converting static documents into actionable data points, organizations can efficiently review and take necessary actions based on the extracted information. This enables businesses to leverage the negotiated terms and make informed decisions, ultimately improving contract management and maximizing the value derived from contractual agreements.
Sensors that digitize the status and transaction of materials:
The changes in demand, delivery, and consumption of raw materials can be effectively monitored by utilizing sensors that digitize the status and transaction information of these materials. By capturing real-time data through these sensors, organizations can gain valuable insights into the fluctuations in demand, track the movement of materials during delivery, and monitor the rate of consumption. This digitization of material-related information enables businesses to make data-driven decisions, optimize their supply chain processes, and ensure efficient utilization of raw materials, leading to cost savings and improved operational efficiency.
How SpendEdge services aid organizations to achieve excellence in procurement?
More prudent decisions using our highly contextualized and granular insights:
We help you in evaluating how technology products can enhance the supply chain and procurement function in various procurement categories. We provide you with valuable insights into the latest advancements in procurement technology. Furthermore, we help you discover technology-based solutions that vendors are developing to improve supply chain management. You can get early warning alerts about impending supply chain risks and frame risk mitigation plans to respond swiftly to specific risk scenarios. Our market insights improve profits through tighter integration with downstream supply chain players and generate more revenue by running robust and efficient supply chains.
Understanding of the main KPIs and SLAs for measuring performance:
We help you get an understanding of the main KPIs to measure the performance of vendors and understand the main SLAs to add to the contract when using technology products to improve the procurement function. Our data collected for KPIs can be analyzed to determine if outcomes are as per satisfaction. This also aids in understanding what should be prioritized or require course correction to ensure pre-defined outcomes are achieved. SLAs record the delivery timelines agreed upon by suppliers and clients. These tools also help businesses to manage their operations efficiently, avoid disruptions, and fulfill customer TAT expectations.
Identify best practices being adopted by peers:
We help you get a good grasp of the most widely recognized and accepted set of procedures that serve as benchmarks and help enhance the efficiency and end results of sourcing and procurement activities. Implementing best practices streamlines processes and brings in standardization of operations, which reduces confusion. By streamlining processes, unnecessary steps are eliminated, which improves efficiency and collaboration.
The success story of how SpendEdge helped a specialty chemical manufacturer
Our client is a specialty chemicals manufacturer based in the US they were facing a situation of increasing operation and production costs. In addition, the current geopolitical situation and inflationary pressure is further hampering the business. To manage the expenses, the client wanted SpendEdge to help with a spend analysis study to identify areas that can help with cost savings and cost avoidance.
SpendEdge analysts conducted a spend analysis exercise and identified areas of maverick spending. The business function responsible was identified and remedial solutions were provided. The analysts also helped to client gain enhanced visibility into organizational spend which provides oversight of expenditure and reduces the likelihood of fraud. Our analysts also analyzed the best practices being followed by global companies related to spend governance.
Through increased visibility on organizational spend, the company could consolidate suppliers and implement cost-reduction strategies. Further, based on the processes being followed by other companies, the client was able to identify additional areas of improvement to manage costs.
Contact us now to solve your procurement problems!
Author’s Details
George Mathew
Associate Vice President, Sourcing and Procurement Intelligence
George is a procurement specialist at Infiniti Research and provides advisory services to clients across the pharmaceutical, CPG & FMCG, energy, and automotive sectors. He specializes in the procurement areas of industry benchmarking, cost modeling, rate card benchmarking, negotiation advisory, and supplier intelligence.
