Half of procurement processes aren't digitalised, say Ivalua
A lack of digitalisation is preventing companies from adopting AI and preventing a strategic focus. Procurement is a sector in particular that Ivalua research suggests is wasting more than a fifth (22%) of its time dealing with paper-based or even manual processes.
Ivalua has found more than half (53%) of procurement and supplier management processes have yet to be digitised. Inevitably, this is creating inefficiencies. Given the amount of data that the procurement sector handles, AI holds real potential to offer transformative value to businesses seeking to stay competitive in digital transformation.
Digitisation within procurement is ‘too slow’
The research reveals that half of procurement leaders (50%) think that the rate of digitisation within procurement is too slow, while 47% state that existing procurement systems are not flexible enough to keep up with constant change and deal with market and economic uncertainty.
It is no surprise that this is having a major impact on procurement’s ability to work on strategic tasks. A lack of digitisation ultimately limits organisations’ ability to make quick, informed decisions regarding their suppliers (47% of those surveyed), prevents organisations from tackling rising inflation and spiralling costs (46%), as well as making it impossible to attract and retain the best talent (41%).
“Organisations are wasting millions in staff time every year on manual processes. This is bogging teams down in low-value tasks, limiting their ability to focus on more strategic priorities,” comments Alex Saric, Smart Procurement Expert at Ivalua.
“Given inflation remains high and the economic outlook uncertain, it’s never been more important to digitise procurement processes, and free up teams to tackle these challenges.”
The need for a solid data foundation
Ivalua states that procurement needs a solid data foundation to harness AI and emerging technologies.
The study shows that 85% of organisations have implemented or plan to implement data analytics within the procurement and supplier management function. Also, 63% say they have already implemented or plan to implement AI or machine learning technology.
However, just 30% of respondents say they are “very confident” in the quality and accessibility of their supplier data when it comes to supporting effective procurement.
Other areas organisations have implemented or plan to implement to transform their procurement and supplier management function include: full end-to-end Source-to-Pay platforms (72%) which can help to better manage their spend and suppliers. In addition, chatbots (63%) are cited as being able to help users make more informed purchasing decisions.
Another area was blockchain technology (56%), which can improve provenance when purchasing goods, as well as Robotic Process Automation (55%) which can reduce reporting time and assist with contract and category management.
In a world where workplaces are becoming increasingly digitalised to affect maximum business transformation, it is crucial that all sectors are able to stay ahead. Ivalua suggests that methods like AI are the first step to ensuring these positive changes.
“AI can be the catalyst for procurement transformation, with clear use cases for processing data, driving automation, creating actionable insights, and informing strategies to augment procurement and supply chain operations,” concludes Saric.
“But poor-quality data will limit the insights produced by AI. Organisations need to walk before they can run, and this starts with digitization. This means taking a cloud-based approach to procurement that builds a solid data foundation that will inform decision making and reduce the risk of ‘garbage in, garbage out’.”
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Other magazines that may be of interest - Supply Chain Magazine | Sustainability Magazine
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