KPMG: How can we Enhance Digital Procurement?
Digital transformation is streamlining procurement through data analytics, automation and cloud-based platforms, catalysing more accurate and faster decision-making.
This change means the procurement function is becoming a strategic catalyst of resilience and value.
In light of this, the global organisation of independent professional services firms, KPMG, has released its ‘Digital Transformation’ report, emphasising the need for procurement functions to integrate high-performing and specialised technologies alongside a main S2P system to create a fully digital procurement ecosystem.
KPMG points out that digital procurement can enhance long-term value by strategically combining data, people, systems and processes.
Jon Hughes, Director of UK Sustainable Supply Chain Lead of KPMG, explains: “Today, the focus is on designing the organisation first – identifying how it needs to operate to deliver business objectives and outcomes – and then determining the strategy, pausing to consider the technology which can best serve the needs of the key processes, followed by selecting the right tools that will enable the most effective delivery.
“This forward-thinking approach ensures that technology supports a cohesive, tailored operating model, rather than dictating how procurement should work.”
The new model for digital procurement
KPMG stresses the need for executives to adopt a hybrid model of digital procurement that focuses on transformation and integrates leading technologies with the capabilities of an S2P platform.
The S2P platform will improve efficiency and standardise operations – making it key to the procurement function by dealing with purchasing, sourcing, payments and contracting.
KPMG highlights that digital tools that focus on procurement priorities – such as supply chain risk, cost management, sustainability and supplier innovation – should work alongside the S2P platform. These technologies will help to add extra insights and functionality to procurement.
Organisations must ensure all tools and systems remain connected to a digital ecosystem to streamline user experience, ensure clean and consistent data and enable advanced automation and analytics.
KPMG focuses on a strategic and modular digital procurement ecosystem that utilises people, processes, change management and technology (while ensuring a S2P platform remains at the heart of its operations).
Strategic priorities enhancing adoption
KPMG points to four key priorities Chief Procurement Officers must utilise to digitise procurement and unlock greater potential:
Cost efficiency
CPOs must make key investments in technologies to catalyse long-term efficiency. Cost savings can be achieved by predicting market trends, automating processes and improving supplier relationships.
Supplier performance management
Procurement teams can call upon innovative technologies, such as machine learning, AI or blockchain, to offer solutions to business challenges, create new value propositions and uncover new suppliers. This digital procurement will offer greater transparency of performance.
Digital procurement can allow companies to track the social and environmental performance of suppliers by enhancing transparency across supply chains. Not only do automated processes help to improve efficiency while reducing resource waste, but digital procurement can also help organisations to choose sustainable suppliers by improving data-driven decision-making.
Risk management
Digital procurement can allow organisations to identify potential supply chain disruptions quickly by offering real-time insights and data, helping to enhance risk management.
Digital tools can improve supplier monitoring and collaboration to ensure compliance, while automation of procurement processes secures greater consistency and accuracy to reduce human error.
Jon continues: “Procurement is evolving. No longer confined to just source-to-pay (S2P) platforms, today’s procurement leaders are building integrated, digitised operating models that align with broader business objectives.
“The future of procurement isn't about solely optimising individual processes – it’s about creating a seamless digital ecosystem that connects every facet of the procurement lifecycle, from sourcing and contracting to supplier management and strategic decision-making.”
Did you know? Jon featured on the ‘Supply Chain Sustainability & Scope 3’ panel and delivered an engaging keynote presentation at PSC LIVE London 2024.
Crafting a best-of-breed ecosystem
KPMG adopts a four-step process to support organisations in selecting best-of-breed procurement solutions and vendor scanning:
Step 1: Desktop research
- Across 11 technology groups, a shortlist of vendors that meet key business value areas in supply chain risk, cost management, sustainability and supplier innovation are chosen
Step 2: Vendor demonstrations
- These shortlisted vendors host presentations and product demonstrations
- The capabilities of each solution are assessed to discover how the tool can tackle procurement challenges
Step 3: Evaluation via a balanced scorecard
- Vendors are assessed and compared using a balanced scorecard approach with a criteria that features vendor stability and roadmap, functional depth and innovation and cost-effectiveness and ROI
Step 4: Digital ecosystem formation
- KPMG creates a final list of preferred best-of-breed solutions
- These will be part of KPMG’s Digital Ecosystem and recommended as tools that can form part of a wider procurement ecosystem
What does the future hold for procurement leaders?
KPMG’s report highlights how CPOs can unlock new outcomes across risk, innovation, cost and sustainability by becoming strategic business partners.
CPOs that focus on supplier innovation, cost management, sustainability and supply chain resilience by utilising digital tools can help impact wider business strategy and deliver meaningful outcomes.
Those procurement functions that utilise digital ecosystems, such as best-of-breed solutions, S2P platforms and integrated data, can unlock greater digital transformation.
CPOs must also alter workflows to enhance efficiency, upskill teams and improve adoption through change management and training for greater process-led change.
KPMG emphasises that those procurement leaders can embrace best-of-breed tools and digital ecosystems can unlock further resilience, innovation and sustainability while creating opportunities for business growth.
Jon concludes: “The future of procurement is about creating an interconnected, future-ready ecosystem – one that is designed for continuous improvement and agility. By embracing best-of-breed solutions, organisations can build a flexible and scalable platform that seamlessly integrates with existing systems, ensuring that procurement is always operating at peak efficiency.
“The key is to create a connected ecosystem where every application, every tool and every team is aligned toward a common goal: to drive sustainable growth and deliver unparalleled value.”
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