Senior officials at global management consultancy Bain & Company say that procurement teams harnessing digital procurement transformation technologies will reposition themselves as strategic players in promoting competitive business innovation.
Bain & Company partners Houssem Jemili and David Schannon stated: “Leading companies are already using digital tools to transform the way their procurement teams work. Artificial intelligence and robotic process automation are automating manual tasks and freeing up time for more strategic activities.”
Yet research from Procurement Leaders shows that less than 10% of firms have actually rolled out procurement tools such as Big Data analytics, serverless architecture, the Internet of Things or emerging blockchain solutions.
Over 60% reported having no digital tech in place to improve supplier relationship management and were dependent upon improvised systems.
The percentage climbs to 70% for tasks such as category management, stakeholder management, risk management and data sharing.
Jemili and Schannon see this as a “missed opportunity” for achieving substantial cost reductions.
The same study revealed that a fully automated procurement function could save Global 5000 companies up to $86bn every year.
Firms with a $1bn-$3bn spending base could expect to achieve a $12m per year cost reduction in procurement headcount savings, while those with a $3bn-plus base could expect annual headcount savings of $27m.
The new technology, they believe, also enhances competitive advantage by driving up the speed and quality of procurement while slashing risk and driving innovation.
With today’s incalculably complex global supply networks, human cognitive abilities to manage them all have been outstripped.
There are a number of reasons for the slowness of uptake of digital technologies, Jemili and Schannon explain.
Many had suffered bad experiences with early attempts to set up digital tech, while others couldn’t calculate the return on investment clearly enough.
However, the business case for digital procurement transformation is becoming clearer and stronger every day. CPOs in five years’ time will “feel amazed about the increasingly strategic nature of their role”.