Don't be blinded by tech hype

posted by Ian Nethercot
14 January 2019

Don't be blinded by tech hype and instead focus on people and places, says Ian Nethercott, supply chain director at Probrand.

Technology has opened a world of possibilities for procurement professionals who are looking to improve processes and drive benefits across the whole business. But with so many options to explore, knowing where to start can often be the biggest challenge. Especially when there are endless tech phrases – such as digital transformation, supply chain 4.0, the internet of things, advance robotics, artificial intelligence – being thrown around.

It’s easy to get fixated and distracted by the buzzwords that accompany new technology trends. But this is the wrong place to begin when it comes to tech. In what other walk of life would we start with the solution and then look for the problem? That’s putting the cart before the horse.

When you plan a journey, you don’t pick the mode of transport before you decide on the destination. We need to think about what it is we are trying to achieve first and then pick the best tool for the job. So, ignore the hype, and focus on the problems we’re trying to solve.
 
1. Become a problem solver

We can find those problems by talking to people in the business and reviewing the processes they are being asked to comply with. Procurement professionals have a reputation for being the ‘cost police’ within an organisation. The department that makes people jump through hoops before they can buy what they need for their job.

Procurement has an opportunity to change that perception by adding value in many different ways, however. We can shift our focus to demonstrate how purchases can deliver time savings, rather than just cost savings. We may also need to look at wider problems, and redefine purchasing criteria so that it rewards productivity gains, innovation or inter-departmental collaboration.

Let’s look, for example, at a straight forward procurement protocol such as getting quotes from three different suppliers before placing an order. This can be an admin heavy process with many hours still spent picking up the phone to speak to multiple suppliers to obtain the quotes, and then faxing or emailing the purchase orders.
 
Not only is this extremely time-consuming for the individuals doing the buying, when it comes to making purchases in a fast-moving market like tech – where we can see up to 20,000 new products being released in a day – there is no guarantee that quoted prices and stock levels will still be the same when the order is made.
 
This is clearly a problem worth solving. With an acute awareness of the problem, we can start to identify the solution. The tech required in this scenario, which offers real-time pricing and stock from multiple suppliers instantly, is often pigeon holed under the buzz term e-procurement.

2. Where’s the added value?

In the case of e-procurement platforms, we can also assess the other benefits this can provide to an organisation, beyond time saving. For example, it offers organisations greater control over expenditure and can curtail rogue purchases.

We have all seen people sidestep purchasing protocol, particularly when a distress purchase is involved. A printer cartridge or USB cable needed urgently may end up being sourced from the local high street electronics store rather than approved supplier channels for instance. While these purchases may feel like small items that don’t warrant the same level of scrutiny as a big-ticket item, they can add up to a quarter of the IT budget – and are nearly always sold with inflated margins.

With e-procurement in place, a digital record of all transactions makes it possible to conduct a thorough spend analysis. This can solve a major headache if you have a problem with purchases either being coded into internal systems late, or not at all.

With an e-procurement platform in play, processes and protocol can also be automated to help improve governance and supplier monitoring. Pre-approved catalogues can also speed up the approval processes and make life a lot easier for buyers in any department looking to make a quick purchase. When purchase protocols are automated it also has a knock-on effect in different business functions as order numbers can be generated automatically too.

3. See real benefits

I recently worked with a procurement team that were, until recently, still faxing purchase orders. Once they embarked on a digital approach, however, they were quickly saving 2.5 days per week on tasks that were previously being done manually. The great thing about finding the right tech for the problem is that it frees people up to focus on the next innovative solution that can improve the performance of a company.

Procurement professionals will always need to stay on top of new and emerging technologies, and there is certainly a lot coming their way, whether that’s 3D printing, delivery robots, or the internet of things. But, rather than become overwhelmed by the hype that surrounds them, we should keep our focus on the differences we can make to people and processes within an organisation. By taking this step-by-step approach, we’ll end up taking bigger strides moving forward.

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