5 Digital Transformation Actions that Procurement Leaders Can Do Now

We produced several briefing papers at the beginning of the year, this one, free to download, is written in conjunction with leading procurement software firm, Jaggaer, by Peter Smith. Although now a few months old, its theme seems tireless in its relevance.

Digital Procurement, Digital Transformation - Five Points for Procurement Leaders to Consider Now

Here's an extract:

Taking The New Standard report (Just Hype Or The New Standard? - A Study Based on the Complete Results of the Global JAGGAER Digital Procurement Survey) as the starting point, along with Spend Matters’ own views, these five recommendations are for procurement leaders who are facing the opportunities and challenges of digital transformation.

  1. Develop a Digital Procurement Strategy – But Start Delivering Too!

The Jaggaer survey that led to The New Standard found that 51% of respondents feel they are “up to date” or better with digital (an optimistic 3% declared their level of knowledge to be “excellent”). Perhaps the survey sample was somewhat self-selecting, but our experience suggests this is an optimistic number, if we consider the entire professional procurement population.

We would be pleasantly surprised to find half of the profession fully conversant with Blockchain opportunities, or with a clear view of the “end state” of digital supply chain integration. In any case, it is essential that procurement leaders get to grips with the topic, and understand the potential for digital transformation, and indeed how to go about successfully executing the steps on the road to success.

So, in our view, it is important to have a digital procurement strategy and a roadmap - if not one that includes every single-track road and cycle-track, at least one that gives a sense of where you’re going!  But it is also important to act now. Don’t fall into the trap of endless analysis, trying to reach that perfect strategy, but never actually implementing.

Organisations will not move instantly from being laggards or even in the pack to being real digital front-runners – this will be built step by step. So, there are relatively basic steps to digitalization, using proven technology, that can be implemented relatively quickly. We discuss data in the next section and getting to grips with that is a core and essential early step.

You can also make sure effective spend analytics capabilities and processes are in place. Electronic sourcing of course is another fundamental digital building block, including advanced sourcing / optimisation tools where appropriate. In terms of purchase-to-pay, move towards electronic invoicing if you’re not there already and consider streamlining the user experience within the purchase-to-pay cycle – that’s where AI tools emerging now, such as chat-bots and digital assistants, will be valuable to help users through “guided buying” processes. 

  1. Data is Key

It was tempting to make this the first point in our list, given it is so fundamental to everything else discussed here. The basic definition of digitization starts with data, as analog information is translated into digital data, so this sits at the heart of every action and transformation that is taking place in this whole area. And yet data also has the potential to ruin digital transformation plans and programmes.

Most of the new processes described above will fall down if data is not accurate, robust, timely and consistent. For instance, having clear “vendor master data” has always been important, but when that data is driving key AI decisions on sourcing, on risk management, and other key business process and actions, it really has to be reliable.

One risk with AI is indeed that “the system” will make or suggest decisions that we humans don’t actually understand ...

... to read on download the whole report to learn about the risks of AI – and much more! Here

 

 

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