Digitalisation in procurement and supply
What does ‘digitalisation’ actually mean?
Digitalisation is emerging front and centre in today’s hypercompetitive global network. Digitalisation is the practice of redefining operations and activities by using technology to build an efficient business environment, where gains are maximised, and costs and risks are minimised.
Technology creates huge internal value through streamlining operations; however, it can boost external value too. Technology can help create a seamless supply network, through to customers, regulators, government bodies and other stakeholders.
What advantages are there to adopting disruptive technologies?
To realise the opportunities and competitive advantages from digitalisation, organisations will need to adopt a more holistic view of their processes and systems. Taking a more strategic, long-term view will enable organisations to use technology to do far more than reduce costs. Look below at some of the advantages of adopting disruptive technologies.
- Helps to free up finances, enabling firms to better allocate scare resources
- Real-time capability to respond to market shifts and competitor actions
- Improves governance and fosters accountability within and outside the organisation
- Mass customisation
- Customer focused
- Strong risk management
- Efficient decision making
- End-to-end integration
- Increased transparency across the supply chain
Which sector is leading the way with technology investment?
Our 2020 Digitalisation in Procurement and Supply report shows the charity sector leading the way. The charity sector has heavily invested in the top three technologies already which are, cloud computing, big data, and augmented reality.
As many organisations have found, adopting a computer-based approach, brings an unprecedented level of quality and speed to procurement and supply management functions.
Check out the case study below which shows how a UK-based environment charity has used technology.
Case study
A UK-based environmental charity and membership organisation has improved its expansive procurement portfolio, with 150 dynamic projects at any given time through the adoption of technologies and digitised practices. Working with over 20,000 suppliers and impacting 7,000 staff and 50,000 volunteers, NT has now transformed its completely analogue procurement processes into a fully digitalized function.
The initial changes commenced to harness the internal processes and attempt to manage decentralised, diverse, and highly customized purchase requests, which required staff spending many hours to structure and execute. By on-boarding a cloud-based, predictive, and code-based system of Supplier Relationship Management (SRM) and integrating it to the existing Enterprise Resource Planning (ERP) platform, the organisation has transitioned from spending hours processing a purchase request down to just five minutes.
This digitally led sourcing process was motivated not to save money, but to deliver organisation strategies, produce value and direct procurement personnel’s focus on tackling more important issues.
The organisations cloud-based procurement system acts as a ‘single source of truth’ for supplier selection and sourcing processes with intuitive, analytical abilities to profile suppliers based on their compliance, cost-effectiveness, fit for the purpose, and above all adherence to environmental policies, which is consistent with NT’s values.
The organisation has obtained a significant degree of efficiency by rolling out a digitalised procurement process consequently enhancing value for money, improving risk management capabilities, delivering on environmental policies and promises, detailing financial benefits and improving compliance. Improved managerial information and control was also achieved.
(Source: CIPS Digitalisation in Procurement and Supply 2020)
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