A new study suggests that organisational inertia about embracing the full potential of digitalisation is impeding the procurement function. A previous study, by Goldman Sachs, found that upper management was reluctant to commit to the intricacies and costs of digitalisation, such as migrating workloads to the cloud and re-platforming apps. Other hurdles identified by Forrester Research included challenges around data security, cost, and the complexities of integrating new technology.
Now, LevaData has found in a survey of senior procurement executives that while they are aware of the efficiencies and cost reductions that new technology, such as Big Data analytics, artificial intelligence, machine learning, and robotics can deliver, many are still using obsolete tools. The survey found that there was a small but discernible increase in professionals who were leading bold procurement transformation projects but progress continued to be slow.
Best-in-class companies were using integrated market intelligence technologies to glean a more encompassing view of their supply chains, but the rest tended to rely on information collected from direct suppliers. Just 8% were using third-party procurement as a service tech solution. 58% reported that they were using AI-powered risk analysis methods, but 64% were still using spreadsheets or methods confined to gathering data from internal sources only.
Fewer than 10% were collecting data from four or more sources, prompting LevaData CEO and founder, Rajesh Kalidindi to say: “A world-class sourcing and procurement organisation could examine at least 1.5 million data points affecting the supply chain, which is more data than any individual could possibly digest and respond to strategically. As more companies implement AI-powered strategic sourcing technologies, those that don’t will find themselves at a crippling disadvantage.” An implication is the CPOs may need to start building ongoing, collaborative relationships with CIOs and IT colleagues, as well CFOs to make the case for digital procurement transformation and its ability to deliver sourcing savings, enhanced spend analytics, and other cost reductions.
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.