Risk Management is a Procurement top priority
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According to a recent global survey, the strategic priorities of the Procurement and Purchasing divisions are mainly digital transformation, cost reduction and risk management, especially in unique Europe, the Middle East and Africa region. Procurement and Supply Chain (SC) leaders found that these priorities f the respondents redisrupted the future investments and digital roadmap after the impact of Covid-19.
According to the survey, more than half considered their priorities due to this crisis. They consider that Risk Management became critical because it ensures the availability of goods and the materials required to manufacture such products.
Strategic investments aim at risk cutback.
Managing risk will demand businesses investing high on digital transformations, no matter the economic pressure caused by the crisis and the need to diminish investment altogether.
In the Middle East, where the average investment is high, more than half of the respondents plan to keep or increase their investments in digitising strategic and transactional processes.
They plan to invest $1.5 million over the next two years to digitise more of the Procurement processes involving administrative job automation, SC traceability, data analysis, visibility, and use cases like smart sourcing, which will boost implementation in coming years.
Leveraging process, people, and technology
Digitalisation will perform better when higher levels of adoption result in more significant progress in purchasing division; the processes are simple, enhances team efficiency and internal customer satisfaction. On the contrary, an organisation with restrained adoption finds not much progress and is left behind somewhat in particular areas such as efficiency and customer satisfaction.
The human factor is crucial in digital deployment, change management and the internal stakeholders’ involvement. It drives added value to the digital transformation solutions and technology integration.
Use Cases will impact Procurement’s future.
We can map the future digital journey according to the adoption of high use cases. To fulfil more efficient risk management, pinpoint high-risk suppliers and find another possibility to balance technology and AI to abridge the process. After that, companies need to adopt process intelligence to better Procurement and accounts payable processes to leverage data analytics and data mining to get rid of likely jams. In the end, a virtual purchasing assistant will automate communications among Procurement staff and suppliers.
Blockchain technology potential
Blockchain technology will get more robust because of its possibility in SC trace and traceable quality-related events, which improve risk management. For instance, an airline that uses Blockchain to track the delivery of a particular product from its origins to its destination possible across the globe; products that demand-controlled temperature, humidity, and storage parameters are critical.
Blockchain tech uses leveraging sensors to create a product journey record and pinpoint possible failure from happening. We have the example of Covid-19 and the importance of vaccine distribution by some manufacturers. A low per cent of respondents.
Are you taking part in the digital transformation journey?
To develop a digital transformation is vital to understand your digital maturity level. It could be a beginner where your company is still working on the digital procurement introductory stage. The purchasing function is not yet considered strategic and might lack overall spending, spending categories, and suppliers.
Digital Transformation starts around the third stage, considering Procurement as a strategic function. Operations become more developed in the latter stages when technology solutions are finally in place. Only the most mature companies have entirely integrated Procurement technology and other advanced AI solutions and Blockchain.
Most of the Middle East region organisations are in the first stages of Procurement maturity; data availability influences their ability to spring forwards to the final stages. Most of your data is still in manual PDF format; once processes are automated and shared-integrated supplier database, it would be much simpler to fast-track the digitisation journey.
Summing up: your level of digital transformation maturity will decide your evolution towards incorporating Procurement 4.0. Ensure you have the groundwork in place, encompassing the right digital processes, data availability, and the talent and skill set to perform. Everyone must be responsible for welcoming and driving transformation.
Is your digital maturity level ready to deploy a digital transformation?