Going Digital: How To Keep Procurement Simple
A look at the 2019 Deloitte Chief Procurement Officer Survey
Since 2011, Deloitte has been providing expert insights into the key challenges and opportunities shaping the course of procurement, through surveys, audits and analytics. In 2019, the focus of their survey, Deloitte Global CPO Survey 2019, can be summed up in one word: complexity. The researchers then follow up by proposing digital solutions, such as those offered by eTrade Procurement, as ideal ways to mitigate complexity.
In this year's survey, 481 procurement leaders from 38 countries took part, representing organisations with a combined annual turnover of US$5 trillion. The report draws attention to a notable increase in complexities that procurement teams face as they strive to add value and achieve positive results. It identifies Complexity Masters, those who rank in the top quartile in terms of performance in the face of high complexity, and who then provide the benchmark for the survey. Complexity masters out-perform other companies in the face of complexity. They have greater alignment of technology with their organisations broader needs, as well as demonstrably stronger digital capabilities than the rest of the survey group.
Four Categories of Procurement Complexity
- External: everything from outside the organisation, for example economic and political risks, international influences such as tariffs, trade wars and climate change, and the evermore global nature of the CPO role
- Internal: stressors within an organisation, such as the ubiquitous need to cut costs, alignment of procurement with the business’s broader objectives, and internal relationships
- Talent: people and interpersonal relationships, along with an acknowledged international talent shortage
- Digital: the challenges associated with technology and digital advancement
Effectively Managing Complexity
Rather than shy away from these issues, as let’s face it, dealing with challenges is part of our jobs, the survey proposes that the way forward is to proactively address complexity
- Eliminate the bad: the factors that cause risk and impede performance, or where simple strategies may otherwise be implemented
- Embrace the good: by making the most of strategic procurement, managing risks and focusing energies appropriately. Acknowledge where complexities are inevitable, such as intricate or multi-faceted purchasing, and keep things simple where you can.
There is a common thread to the research: what we need in order to manage, and at times even eliminate, complexity is digital transformation. The researchers propose that if CPOs can accomplish this they will be able to achieve mastery over all other forms of complexity. Indeed they go so far as to state:
”eliminating and embracing complexity effectively, hinges upon one key initiative: digital transformation”.
The benefits of digital procurement are manifold:
- Dramatically improved speed, agility and efficiency
- Greater transparency
- Reduced risk
- Increased compliance
- Accelerated innovation
- Advanced strategic thinking
- Improved resource allocation
- Agile partnerships
- Cost reduction
What would this actually look like? A truly digital procurement organisation automates repeatable tasks. Procurement professionals get timely insights and analytics through artificial intelligence (AI) and intuitive online tools. New and smarter ways are applied to integrate data, enhancing day-to-day operations and decision making. And it transforms how buyers interact with suppliers. The outcome? Reduced procurement complexity, and crucially, a great result at the bottom line. A 2018 report by the Hackett Group claims savings of more than 70% per order are possible through the use of digital technologies, a very attractive outcome.
Utilising the Talent
The new wave of tech-savvy millennials, currently the largest group in the workforce, will undoubtedly have a big role to play in digital transformation. They are at home in a digital landscape, having grown up with technology at their fingertips. Embracing this workforce, along with gig-workers and other non-traditional contract employees, will go a long way towards addressing the complexity arising from talent shortages.
The Rise of e-Procurement
The Deloitte Survey shows 59% of respondents are looking to implement digital procurement transformations by extending new, innovative digital procurement tools/services. Second only to analytics, 37 per cent of complexity masters cite that the most impact on technological change comes from an upgrade of procurement applications, such as e-procurement.
eTrade Procurement: Keeping it Simple
Here is where eTrade Procurement comes to the party. With our simple and intuitive webapp auction platform, we can help you start on this journey towards digital maturity, or add another option to your evolving digital toolbox. Our easy-to-use reverse auctions will be particularly valuable where cost is the primary differential, or for a homogenous product or service. Your simple purchases will be made even simpler, reducing costs and maximising efficiencies, in turn allowing you to focus your energies and efforts on other strategic, multifaceted and intricate negotiations. You can eliminate the bad and focus on the good!
eTrade: An Accessible Solution
Although the benefits of digital procurement are substantial and inarguable, getting on board is definitely a work in progress for most companies, and its success will be driven by your people rather than just the technologies themselves. Getting there will take time, money, engagement and vision. eTrade’s solutions can be implemented quickly, with minimal investment, and minimal training, and will provide an ideal starting point for your venture into the digital sphere, one that’s data-rich and analytics-driven, and where significant savings can be realised.
To learn more or request a trial visit our website or contact Pete or Andrea to see how eTrade Procurement can help in your quest to mitigate procurement complexities.