Demystifying technology in procurement

“If organisations aren’t able to reap the benefits of emerging technologies, they stand to fall behind their competitors,” warns Alex Saric, Smart Procurement Expert at Ivalua. “They won’t be able to leverage the same supply chain insights and make informed decisions.” 

This is a simple warning for procurement leaders seeking competitive advantage over competitors, whatever the industry.

The rapid advancement in procurement technology mean it’s important to cut through the hype-cycle of product offerings, and understand how solutions can enhance sourcing strategy.

Rapid progress in procurement technology 

Saric says procurement tech is having a significant impact, both on product development and also the relationships suppliers have with companies.  “Best-in-class chief procurement officers place technology at the core of their strategy to mitigate the impact of supply chain risks like shortages,” says Saric.

He adds: “They use it also to identify opportunities to collaborate with suppliers on innovative new products, and also to ensure suppliers are supporting strategic business goals like sustainability.

“Tech is vital in defining and driving forward industries. In recent years especially, procurement departments have made it the foundation of their operations. Think about the impact Tesla has had in the automotive sector.”

And with Generative AI turbo-charging tech development there is a growing division between the tech pioneers and the laggards..  

Research shows procurement leaders say fewer than half (47%) of procurement and supplier management processes have been digitised,”   Plus, organisations are wasting more than a fifth (22%) of their time dealing with manual or paper-based procurement processes – and onlyhalf (50%) of procurement leaders recognise that the rate of digitisation in procurement is too slow. 

Selecting the right procurement tools 

Saric urges procurement executives to show leadership, by demystifying the myriad digital tools and solutions. Clear communication –  – in the shape of a clear digital roadmap – is key, he says

Sarci says: “Given the breadth of today’s technology landscape and rapid innovation there is a real danger organisations select solutions that either don’t deliver as promised or fail to adapt to changing requirements.

“Leaders must develop a clear digital roadmap and select technology that builds the necessary foundation to support today’s requirements with the flexibility to expand for tomorrows.”  

Taking such an approach is the route to understanding precisely what thea given solution needs to provide. A roadmap approach can also help organisations map their digital maturity level, which helps them identify compatible solutions that can resolve priority problems. This in turn provides a solid foundation from which to scale and adapt solutions as business needs change over time.  

Is Gen-AI worth the hype?

With the current hype-cycle over AI showing little sign of fading, Saric believes Gen AI will become a standard tool. 

“AI hype will likely peak in 2024, but unlike with past technologies, it will be broadly adopted and deliver significant value,” he says. 

However, Saric warns Gen Ai is no silver-bullet for all procurement challenges, and that sourcing professionals must learn how to get the best out of the technology. 

“Expectations might be sky-high but procurement leaders must accept Gen AI solutions are like any other tool; they are only as good as the person using them and the quality of data fed to them. 

“Leaders will reap the benefits, while laggards will be disappointed, as they fail to adjust how they work to leverage the capabilities of this innovative technology.

“Organisations should adopt flexible and extensible AI solutions that have pre-built applications and can scale to support new use cases and allow users to address the challenges that matter most to their procurement teams,” adds Saric.  

Quality data key to procurement tech 

Saric’s point about quality data is key here. It is data that defines the parameters and extent of AI success.

“Failing to build a solid data foundation means businesses will be unable to harness AI,” Saric says. “Poor-quality data will not only limit the insight produced by AI but also undermine output accuracy and reliability.”    

Achieving that level of transparency and clarity, he points out, is helped by  technology, but it is down to the business to make it work.   

“Businesses must take a smarter approach to procurement,” says Saric. “They need to Implement tech that provides visibility across the supply chain, as it is this that provides the  reliable data needed to inform decision-making. 

“Organisations must establish a single data source for spend and suppliers, making quality data easily accessible to users. 

”This will help reduce the risk of ‘garbage in, garbage out’ and ensure organisations are on track to make the most of any emerging technologies.”