A procurement expert has warned that achieving ‘Procurement 4.0’ – the new-generation, fully digitalised procurement ecosystem combining big data analytics with cloud and automation tech – is still a long way off for many organisations. This is because they are failing to implement the necessary preliminary steps.
Smart procurement expert Alex Saric draws on recent Forrester research that shows a mismatch between widespread claims of “advanced” procurement maturity and the underlying reality.
Saric said that the reality is that organisations are nowhere near Procurement 4.0, which is leaving them in danger of losing out to digital-savvy competitors that are “further ahead on the procurement transformation curve”.
The first step, he urges, is to digitise all processes to lift procurement teams out of being burdened with laborious and improvident manual processes.
This entails integrating currently disparate data sets stored in siloed repositories within the organisation.
When data is stored badly by being spread haphazardly over multiple systems in multiple formats, it’s effectively dead because it’s invisible.
Data siloes make it impossible to compare data sets properly and result in hundreds of hours being wasted on searching for information.
Processes, therefore, need to be systematically digitised so that data is captured and kept effectively by being incorporated into a single repository.
This brings together data from suppliers, third parties and from within the organisation, giving procurement teams an all-round view and thereby dramatically improving their efficiency on all fronts: spend analytics, cost reduction, strategic sourcing, supplier relationship management, category management, and so on.
This radically improved visibility across the supply chain hugely increases opportunities for collaboration with suppliers, drawing on their expertise to develop new products, innovations and efficiencies.
This is genuine ‘next level’ procurement founded on accurate data and smart decision-making.
Saric concludes by warning that businesses that fail to digitally “smarten” their approach to procurement will stand little chance of reaching that next level, which means losing precious ground to more digitally adept competitors.