Procurement in the Digital Age

Posted on 20th August 2019

New technologies are transforming the way companies do business, reshaping the procurement function, and how they manage their supply chain. Public sector procurement alone accounts for a third of all public spending at just shy of £3 billion. Achieving value for money is one of the obligations on public bodies, and relatively low-cost digital solutions are redefining how they accomplish this. Digital procurement provides the procurement function with an opportunity to make substantial savings and drive transformational change.

What is digital procurement?

Digital procurement is using technology to improve efficiency and identify where you can refine the procurement process. Starting with data management, cloud hosting lets you store, organise and access large amounts of data all in one place. Improving the quality of your data will allow you to analyse it effectively and make business decisions based on the results of the analysis. For example, it will give you greater insight into how your suppliers are performing. You can then address underperformance before it has a substantial impact on your business.

There are three areas where digital procurement is making a significant impact. Sourcing goods and services, maintaining stock and supplier management.

Strategic sourcing (S2C)

Procurement technology such as AI and machine learning is helping procurement professionals to manage spend in real-time, predict demand and potential new supply sources. Spend analysis reports allow professionals to see what the need is for products or services. They can then place more accurate orders with suppliers and keep better control over costs. The technology also increases transparency, ensures consistency and standardises procedures throughout the tender process.       

Transactional procurement (P2P)

Technology can streamline P2P procurement, improving efficiency and making it less labour intensive. Rather than spending time reordering stock, Robotic Process Automation (RPA) automates your order process. By analysing previous orders and stock data, it knows when new stock is needed and places an order. It can also automate the payment process by generating purchase orders and triggering payment of invoices on receipt of goods and services. Staff will be freed up to deal with more complex tasks.

Supplier Management

When it comes to mitigating the risk of reputational damage, supplier management is the part of the procurement process on which to focus. With digital procurement giving increased visibility over the supply chain and identifying high-risk suppliers, you can proactively manage contracts and mitigate risks. Supplier management software gives you a central repository for all supplier data and. Analysis of this data will allow you to identify suppliers who are not hitting their KPIs or compliance obligations. You can take remedial action to improve performance or as a last resort, terminate the contract.

The advantages of digital procurement

Organisations will benefit from using a combination of digital procurement solutions such as spend analysis, pipeline planning, eSourcing, contract management and supplier relationship management. If you use Software as a Service (SaaS) to implement the software, little preparation is needed, and deployment is fast and efficient. Advantages of using digital procurement include: 

Reduced capital investment

Traditionally companies have invested heavily in IT infrastructure, with in-house servers supporting their networks and an IT department installing and maintaining any hardware. The cloud now provides virtual hosting for networks, servers and software on a pay-as-you-go basis. Companies no longer have to invest in physical hardware; instead, they rent storage space from cloud providers.

Increased organisational efficiency

New technology impacts efficiency across an organisation, not just the procurement function. Examples are:

•        Organising unstructured data from numerous sources into structured sets that can be analysed and used to improve decision making

•        Collating financial information that allows real-time spend analysis and automatically reports on overspend

•        Automation of mundane, manual tasks, reducing error rates and improving payment cycles

•        Improved extraction times for critical information from hard copy and digital files and documents enabled by machine learning  

Improved communication

Digital procurement solutions provide a communications portal where companies can communicate internally and externally and maintain a central record of all communications. With all the information about a contract or supplier accessible in one place, you can share information with your suppliers. You can also enable them to upload documents or raise queries.

Internally, your staff will see relevant data about your suppliers, and they'll be able to generate reminders for tasks and emails as well as custom reports relating to your supply chain.

For a relatively low outlay, digital procurement solutions will add value to your organisation, mitigate risk and improve your supplier management processes. They allow for an agile approach, delivering fast results without oppressive capital investment. Contact Atamis for more information on how procurement software can benefit your business.

Back To Blog »
© Copyright 2020 Atamis LtdWeb Design By Toolkit Websites