Digitalization in Procurement: Seizing the Opportunity Now

The business landscape has changed significantly in recent years, with priorities changing quickly as a result of unprecedented events, disruptions leading to supply shortages and runaway inflation.

Many of these changes and new priorities are likely to transform the way businesses operate in the new normal.

In fact, for many businesses, these new priorities may now be a part of their core competitive strategy.

Dependence On Legacy Systems

Today’s rapidly changing market requires a business to make swift adjustments, respond quickly and, most importantly, work with real-time data and insights.

However, despite these new-age requirements, many enterprises continue to rely on traditional ERP systems that are inflexible, siloed and can no longer meet their requirement.

As these systems work in silos, they break the source-to-contract (S2C) and procure-to-pay (P2P) function’s cohesiveness and efficiency and create gaps between business units as well as procurement and supply chain functions.

Disconnected systems hamper supply chain visibility and collaboration, thereby creating confusion in the absence of a single source of truth for stakeholders.

Paul Blake, senior director of engagement at GEP, explains the drawbacks of ERP systems. “If you are going to do strategic procurement and making the effort to negotiate with suppliers, getting the supply base right and putting all the contracts in place, what value have you delivered if the contracts are just left to rot and your procurement and purchasing activity is not intimately aligned to the contracts. How are you going to do that if you have got different systems?”

Digitalizing Procurement Is the Key

Of late, there has been a lot of talk about digital transformation. Despite all the hype, there has been little action on the ground.

Instead of investing in a multi-year, multi-million-dollar ERP and then waiting for years to see the promised returns, businesses must adopt a digital procurement platform that can deliver quick results.

A unified, end-to-end source-to-pay (S2P) solution that can bridge the gap between supply chain planning and execution. Building stronger S2P is also key for resilience and sustainability.

Such a platform can connect disparate systems and ensure seamless flow of data and information across the entire supply chain network. By creating a single source of truth for all stakeholders, it can foster collaboration and help a business operate smoothly and build resilience.

Additionally, it can reduce cycle time in introducing new products and speed up time to market.

Some companies argue that investing in digital procurement can be a costly affair. However, the truth is just the opposite. Contrary to the argument, investing in a digital procurement solution would add value and reap benefits in the long term.

Blake explains: “It’s not just about the license cost of the software. It’s not even about the cost of implementation or maintenance. The whole thing has to include an analysis of the additional value that can be brought to the company and the cost of not bringing that value.”

Delay In Technology Adoption Can Prove Costly

Clearly, it is time for businesses to walk the talk on their digital procurement goals.

The stakes are high. Amid growing economic uncertainty, the possibility of disruption impacting supply chains remains high.

To mitigate risk, you must act now and prepare beforehand. Digitalizing procurement can be the ideal start to this process, especially when the next big shift by your legacy ERP provider may not be in the best interest of your procurement function.

To know more about the benefits of digital procurement and why you should not delay its adoption, click here.