In the recent 2019 CPO Study produced by WBR Insights, three major findings were realized regarding the challenges facing today’s procurement professionals:
- First, cost-reduction is no longer the only metric on which to judge procurement ROI.
- Second, digital transformation is inevitable and necessary.
- Third, winning buy-in from stakeholders and overcoming rebuttals are major obstacles to digital transformation.
Fortunately, a supply chain management SaaS, like Avetta, can resolve each of these procurement concerns.
Emerging Technologies in Procurement
Now that digital transformation is well on its way, what’s next? Artificial Intelligence (AI) is beginning to deliver systems that will change the way everything is done, from running repetitive sourcing events to negotiating with suppliers. The possibilities for using AI across the full-spectrum of procurement seem to be endless.
Another emerging technology is blockchain. This allows for transactions to be confirmed without any third-party intermediary. The security is unprecedented and can be applied to contracts, purchase orders, payments, and the entire supply chain.
Finally, while not new, the further generation, mining, and controlling of big data will continue to impress. Sources for both structured and unstructured data will expand internally and externally, and analytical capabilities will skyrocket.
New Ways to Measure the Value of Procurement
In previous years, the value of procurement processes and decisions was based solely on the cost of goods sold and the reduction of third-party budgets. However, according to the survey, just under half of respondents listed different metrics used to assess value. These metrics included ROI on functional cost vs. P&L savings, EBITDA reduction, and SG&A contribution. The key takeaway is that a multidimensional view reveals the many ways procurement can affect an organization’s overall financial health.
Avetta increases the value of procurement further in three distinct ways:
- Procurement SaaS platform and Avetta’s expert team pre-qualify contracts during the RFP/RFI/RFQ process.
- Document management is maintained in the cloud, making onboarding of new and existing suppliers quick and easy.
- Avetta removes the burden of tracking Certificates of Insurance; suppliers simply upload their documents, and Avetta insurance professionals verify that client-defined limits have been met.
Digital Transformation is the Future of Procurement
The survey also revealed that 84% of respondents are sourcing digital transformation solutions, integrating them, or have already completed their transformation.
According to Mudit Kumar, Senior Director at GEP Worldwide, “What we are seeing now is that technology, especially emerging technology, is becoming a central part of the procurement professional’s agenda. They are taking personal interest, investing more time in it, and driving some of these programs with personal accountability, which I think is very important.
Digital transformation leverages digital capabilities to improve efficiency in processes, products, and assets which can enhance customer value and manage risk. Avetta’s SaaS platform augments any organization’s digital transformation in multiple ways.
Clients get instant access to prequalification data for the entire supply chain from any web-enabled device. Additionally, by allowing clients to define requirements for suppliers ahead of time, the Avetta platform digitally prevents unqualified suppliers from slowing the procurement process down.
Adapting to the Developing Digital Transformation of Procurement
After companies have sourced the digital transformation of procurement, many wrongly believe they’ve done enough. The truth is that adapting to this new process takes more direct involvement if the transformation is going to be truly transformative.
You must have a strategy in place. Where do invesments need to bee made in infrastructure, processes, and resources need to be invested in? What is the vision behind going digital? What is your plan for smooth and effective change management?
You must build your team. Do they have sufficient capabilities to deliver on the strategy? Do you have proper risk management professionals on hand to assess and control internal and external risks?
You must collaborate with suppliers. Can you involve them more strategically when making decisions? Can they offer you the visibility, transparency, and assurance that will empower your partnership?
If you take a passive stance on digital, results will be meager at best and a failure at worst. However, by leaning into the transformation and being more aggressive with your tactics, you can expect greater success than initially anticipated.
Overcoming Internal Resistance to New Procurement Processes
One of the challenges facing procurement professionals is the difficulty of bringing new technologies into pre-existing environments. Avetta understands that procurement teams are often required to work with multiple software platforms including ERP, vendor management, and purchasing systems. That’s why Avetta offers an easy-to-use API that simplifies communication across systems, giving different teams more insight to make better decisions.
Supplier data such as contact information, account status, flag status, audit data, and more can be quickly referenced from the Avetta database and displayed in multiple software applications. If you’re a procurement professional, see how Avetta’s Procurement and supply chain software can be the catalyst to your procurement digital transformation.