Digitising Procurement: The key to success or failure

Probrand recently carried out a study, produced in partnership with CIPS, to survey procurement professionals and IT buyers to understand procurement’s current state-of-play.

The study found that less than one in five organisations have completed their digitalisation journeys, and in the current milieu, this spells serious trouble for procurement.

Seismic geopolitical shifts, the pandemic, the war in Ukraine and consequent economic instabilities have hit businesses all over the world, and intelligent adaptation is needed.

The procurement function has, in particular, been heavily hit, beset with challenges from production delays and logistical log jams to inflationary pressures and erratic exchange-rate fluctuations.

Procurement Magazine has reiterated over and again, that digitisation is essential to sharpen the competitive edge, and to sheer survival in times of such critical uncertainty.

Malcolm Harrison, CIPS Group CEO has said: “Investment in digitalising procurement and supply chains has never been so important. Whatever your corporate goal might be, a digital platform is critical to making more informed decisions.”

The numbers

The Probrand/CIPS survey revealed that a quarter of buyers are spending the equivalent of one day each week researching IT purchases – “including comparing equipment specifications or checking prices and stock availability.”

This is lost time, lost money and lost potential. 

According to the survey, 71% said they spend a significant amount of time emailing with 70% saying the equivalent effort was being spent on calls.

Without digital processes in place 63% are still relying on manual systems as their primary method for order-placing. This is a huge and unnecessary drain on resources. 

The research also revealed that:

• 63% of those surveyed are still relying on manual systems

• 23% are spending a significant amount of time leafing through printed catalogues

• 51% of those surveyed were having to wait at least three days to receive a simple PO (Purchase Order)

• 17% said that the process was taking more than a week on average

Malcolm Harrison, Group CEO, CIPS Group has said: “If you’re standing still on digitalisation, you are already falling behind.”    

Obstacles to digitalisation

Of those surveyed, less than one in five (18%) believe that they have reached full digitalisation. At a time when digitisation is key, less than a fifth that have moved in this direction, is problematic.

These numbers are worrying considering the state of the wider mise-en-scène, and the increasing risks to supply chains and procurement in both ecological and economic forms.

Alarmingly, more than a quarter (28%) said they currently have no plans in place to move towards digitalisation.

With 82% of organisations yet to fully digitalise their procurement processes, it is clear there is still work to be done. But, to ensure they are moving in the right direction, steps can be taken to avert any further harm and ensure the most beneficial outcomes:

What needs to be done

The report that was produced out of the survey offered the following advice:

• Analyse your most time-consuming tasks to identify the processes that can and should be automated.

• Assess which suppliers are offering digital platforms and portals that can help you digitalise and provide the live data you need.

• Manage risk by incorporating multiple data sources, from various suppliers.

• Do your due diligence! - Ask whether information is coming from authorised sources, if you are getting full supply chain transparency and is the data coming via an FTP or EDI (Electronic Data Interchange) connection?

• Integrate your IT systems with supplier platforms and portals where possible to access live data and enable digital workflows.

• Check if suppliers can feed data directly into your ERP system, for example.

• Create a digital approval workflow to reduce unnecessary delays, where possible. These can be developed to align with your organisation’s delegation of authority (DOA) policy.

• Establish a digital ordering process that will reduce the manual work involved for you and your supplier. 

• This is not about distancing yourself from suppliers. It’s about reducing administration so you can build more meaningful and strategic partnerships.

• Enable digital data management. With data being stored and processed digitally, you will enable better analysis and reporting to take place.