PwC/Ivalua: Procurement’s role in supply chain optimisation

Procurement and supply chains are complex and dynamic functions. There is no denying that demands and expectations are continuing to rise, particularly when it comes to operational transparency, product origin, quality standards, and sustainability efforts. 

Coupled with this, supply chains are being affected by external influences such as extreme weather conditions, supply shortages, global health issues, and economic crises. 

Ultimately, to stay ahead of these risks, organisations need to embrace autonomous and end-to-end connected ecosystems. Now is the time to discard the linear model. 

Technology’s role in procurement and supply chain transformation

Leading procurement software company, Ivalua explains: “Digital supply chains use one integrated network for all relevant supply chain partners, including procurement, suppliers, service providers, and even customers. These autonomous ecosystems are connected by data that is continuously available to all stakeholders, optimising information quality and improving decision-making.”

But do the benefits outweigh the initial costs?

In short, yes. According to Ivalua and PwC, investing in digital technologies are providing procurement and supply chain professionals with significant improvements in productivity and efficiency. 

“These ‘Digital Champions’ who are implementing supply chain technologies and developing sophisticated automation and digitisation are seeing a tremendous return on their investment,” said Ivalua.

These ‘Digital Champions’ are reporting almost a 7% increase in supply chain costs savings on a recurring basis, as well as an almost 8% increase in revenue. “This is significantly higher than average organisations, and more than double that which is achieved by Digital Novices,” added Ivalua. 

But where are the benefits coming from?

While hard to directly quantify, many benefits can be seen and are strategic in nature. Such benefits include improved planning, higher quality, and increased customer satisfaction and retention. 

In addition, many financial benefits can be seen including greater profitability, reduced costs, accelerated time-to-market, and faster time-to-delivery. 

Where do ‘Digital Champions’ focus their efforts?

Supply chain transparency and sustainability

While these are viewed as a priority for many companies, ‘Digital Champions’ are significantly closer to achieving end-to-end supply chain transparency with the help of advanced digital technologies. 

Having high levels of visibility can help to reduce supply chain risks and address sustainability initiatives. 

Smart logistics

By connecting physical shipments and information flow between customers, suppliers and manufacturers in real-time, organisations can drive savings and growth in connected supply chain ecosystems. 

‘Digital Champions rate smart logistics as a top priority, accounting for more than half of their overall supply chain savings.

Supply chain segmentation

According to Ivalua, supply chain segmentation allows distinctly different transactions to be dynamically allocated to the best supply chain segments. 

Two-thirds of ‘Digital Champions’ are implementing this approach, reporting a significantly positive impact. 

AI

AI can be used as a powerful decision-making tool. It helps to create a supply chain system that can automatically adapt to changing conditions. Those that are ‘Digital Champions are leveraging AI data more extensively than others, making significant improvements in transparency and decision-making. 

Operating model development

In order to master today’s supply chain challenges, organisations require flexible organisations with a digitally empowered and upskilled workforce. Those considered digital champions are making these changes to overcome complex supply chain challenges.

Closed-loop and integrated planning

By synchronising planning with real-time execution and integrated supply chain partners, ‘Digital Champions’ are recognising the core role that this plays in establishing a connected and autonomous supply chain.

According to PwC, 72% are already using end-to-end planning tools.

“Organisations must continually develop their supply chain capabilities to improve resilience and agility in a constantly evolving business and environmental ecosystem. To achieve this, they need a digital end-to-end supply chain solution that will improve visibility, integrate data, synchronize stakeholders, and keep up with the changing demands of customers. Digital transformation will lead to long-term supply chain success and is a key factor in driving the durable growth of the global economy,” commented Ivalua.

To read PwC’s full report, click here.