McKinsey: Automation is the key to solving procurement ills

McKinsey report reveals the power of automating procurement to solve purchasing troubles brought about by global events

A recent SDC article rehashed the now-ubiquitous idea that present procurement and purchasing troubles can be solved through automation.

The troubles in question arise from the usual suspects: The pandemic; Brexit; rising inflation; the energy crisis; the war in Ukraine, and now; the increasing impact of ecological threats.

The article refers to a recent Mckinsey survey, which found that “among 160 business procurement leaders, 86% have observed gaps in purchasing capability as a result of the coronavirus.”

It goes on to say that “a similar number also believe that procurement plays an influential role in leading their organisation’s post-COVID recovery— and were nearly unanimous that a reimagination of the entire procurement function is required.”

The news is nothing new. Any organisation that isn’t heeding the incessant clarion calls to automate will find themselves at a major disadvantage in the procurement world, and in the business world at large.

A recent Procurement Magazine article reiterated the message that “digitising procurement,” is “the key to success or failure”.

The article took its cue from a recent Probrand/CIPS report which reveals that the majority of businesses are really lagging behind in digitising their procurement processes. 

There is a clear disconnect between the call to automate, and the numbers of organisations that are moving to do so.

The Probrand/CIPS report revealed that 63% of procurement professionals are still relying on manual systems, while 23% are spending a significant amount of time leafing through printed catalogues.

A cause for concern is that more than a quarter (28%) said they currently have no plans in place to move towards digitalisation at all.

Automation has the potential to counterbalance the obstacles brought about external threats, (now internalised to organisations), but in order for that to happen, procurement must move with haste to automate their processes. 

There are major benefits to automation, notwithstanding:

  • The reduction of risks
  • Supply chain transparency
  • More effective communication
  • Simple data layout
  • Better data insights
  • Digitisation of assets
  • Robust live reports
  • The enhancement of efficient collaboration
  • Cost-savings
  • Enhanced adaptability

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

It’s high-time that procurement organisations, including yours, move to automate their processes. The fear should not be attached to change, but to the potential failures that will be brought about by failing to change.

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