How Can Operational Procurement Teams Benefit From Digitization?
By Danny Schaarmann, xSuite North America
As digitization continues to change and improve the way businesses operate, a broader range of key operational teams is looking at the way they can transform processes and workflows. The objectives behind digitization are diverse, but from better efficiency and quicker decision making to uncovering new opportunities, the potential for improvement is everywhere.
In delivering mission-critical capabilities, operational procurement teams are vital to keeping the wheels of business and industry turning. For these teams, digitization offers a range of potential routes to improving their approach, delivering greater value, and allowing them to more closely integrate across their organizational hierarchy. In considering its potential, there are some important foundation points.
Working With Real-Time Information
Access to data in real-time - and being able to act based on the insight it brings - is rising up the list of boardroom priorities in general. For procurement departments, in particular, digitization provides a proven route to keep pace with the “speed of data,” particularly when cumbersome manual processes are automated to move data along the decision-making chain much more quickly. A great example can be seen in organizations that have digitized the document management processes - an approach that can effectively eliminate the time some staff must spend waiting for internal mail to reach them.
Access To Transformational Business Insight
As part of an integrated strategy, these digital processes are far easier to monitor, manage and assess than traditional analog workflows. As a result, procurement departments can work to continually optimize every process, while sharing valuable business insight with colleagues on other teams.
This insight can lead to significant improvements in their understanding of supplier performance, for instance, where monitoring and optimizing delivery times can be of huge benefit to other departments further down the supply chain. This not only increases efficiency but can have a demonstrable impact on the value delivered by procurement to the rest of the business while improving the integration of key teams.
Improving Efficiency
Efficiency metrics are an important performance indicator for procurement teams and their leaders. Key indicators such as the number of purchase orders per procurement officer or cost per purchase order offer the insight required to identify potential bottom-line improvements and help develop better processes. For instance, when data is automatically routed from request forms to the ERP system, the process becomes quicker and more accurate, giving procurement officers scope for increasing efficiency.
Building Better Internal And External Partnerships
Using digitization to build more efficient processes can have a domino effect for both internal and external stakeholders. For example, using digital infrastructure to place orders more quickly with suppliers helps boost supply chain efficiency by minimizing protracted turnaround times. By reducing friction and inefficiency across the supplier/customer relationship, teams also can free up time to optimize other processes, share new ideas or simply build better relationships.
Providing A Better User Experience
There’s no doubt that today’s digital and browser-based apps offer a much-improved user experience over their legacy counterparts. By delivering a simple, more intuitive user interface, optimized for use across both desktop and mobile devices, users can leave behind some of the frustrations associated with ERP systems that were designed to be functional rather than friendly.
This is much more than a simple “nice to have.” Well-designed and delivered digitized processes that offer a superior user experience will always be accepted and used more than something frustrating to use and hard to understand. As a result, procurement teams are less likely to have to deal with issues such as “maverick buying,” whereby goods and services are purchased from outside procurement departments because existing processes can’t meet the needs of everyone across the organization.
Creating A Technology Culture For Digital Natives
In the current employment climate where experienced talent is increasingly hard to find, leaders need to ensure their working practices, technologies and cultures are as attractive as possible. Providing today’s digital-native employees with effective technology tools is an important piece of the puzzle, and the extent to which processes are digitized will influence their view of how innovative a potential employer is. A procurement department that focuses on digital innovation, for instance, is likely to be much more attractive to both existing and potential employees than one that still relies on a paper trail to manage and fulfill key processes.
Digitization is making a significant contribution to the impact of operational procurement teams on their business as a whole. As the trend continues to grow in supply chains across the economy, those organizations that focus on digital innovation will be ideally positioned to move ahead of those that remain reliant on legacy processes and technologies.
About The Author
Danny Schaarmann is CEO & President of xSuite North America.