5 Benefits of Digital Transformation in Procurement
By Hugo Britt | March 9, 2021
Used intelligently, procurement technology can not only drive cost savings but can transform and elevate the profession’s place within the business.
In several recent episodes of The Sourcing Hero podcast, our guests addressed the benefits of digital transformation in procurement.
Digital transformation attracts top talent
Newly qualified procurement professionals are increasingly savvy about what they expect from their prospective employers. Alongside a competitive compensation package and a robust CSR policy, professionals will seek out those forward-thinking organizations that are embracing the many benefits of digital transformation.
In Episode 11 of The Sourcing Hero podcast, Stephany Lapierre, Founder & CEO of Tealbook, gave advice to younger procurement professionals: avoid working for an organization that is stuck in an old-school way of thinking.
She advises that ambitious and energetic candidates ask the right questions about company culture and the vision for procurement.
“Is the company at a stage where they are close (or in the middle of) a digital transformation? What’s working what’s not working? How are they thinking about data and what’s their data strategy? Ask the right questions and you’ll know whether you’re joining a team that’s more progressive. It will give you the opportunity to be a lot more strategic in your role and not get into a tactical position.”
An organization that is resistant to change runs the risk of discouraging top talent. As Stephany highlights, “there are so many companies doing things differently.” Why would a rising star accept a position at an outdated organization?
Digital transformation improves talent retention
Not only will an organization’s commitment to digital transformation in procurement attract new talent, but it will help you hold onto the talent you already have.
In Episode 8, Dave Hulsen, Co-founder and COO of RFP360, spoke to us about resistance to digital transformation at the top. “There are a lot of buyers that have tried to bring a solution into their company and they’ve been met with some resistance from upper management,” he explained. “They might think about things differently or maybe they have some historical concerns – they’re not thinking outside the box.”
Dave advises that procurement professionals should continually challenge their organization’s people, processes, and technologies. “Fighting for tools and technology is tough against budgets, especially in the environment we’re in right now. But you can convince somebody that you’ll get better competition and better results at a better price, even if you don’t have the hard data to back that up. I think it would be an organization you might not want to work for if they were opposed to change.”
Digital transformation enables strategic thinking
Aman believes that the right technology implementation can transform procurement’s value proposition by freeing up time for strategic thinking. “Everyone also wants a seat at the table,” he begins. “But I think the important factor for individuals to really think about is technology. Where is technology going? If I can relate to technology and bring that into the organization it gives me the space to think about more strategic thinking.”
Strategic thinking enables the profession, which is typically regarded as an “unsexy” one, to better align with the new way of doing procurement or business and see things from a fresh perspective. “Individuals moving into the procurement space should look around at the way the world is changing and think about how to leverage that.” In bringing a fresh perspective, they can examine how to best contribute to their organization’s success with technology and new ways of thinking.
Digital transformation addresses an organization’s biggest pain points
Embarking on a digital transformation is an opportunity to resolve some of procurement’s biggest challenges, streamlining processes, driving value, and improving transparency.
Joanna Martinez has produced a learning series that addresses four key aspects of digitization – blockchain, artificial intelligence (AI), robotics process automation (RPA), and cloud computing. The modules, known as The World of Digital Disruption, advise on how to develop a digital strategy for your organization and put it to work.
In Episode 6, Joanna notes the importance of adopting solutions or technologies that apply to your industry. “If you are in a small business that’s not processing a lot of orders or a lot of invoices then RPA is probably not for you (yet). But if you have some pain points or things that aren’t working well in your business, there are a lot of very inexpensive AI applications out there that might be a better bang for your buck.”
Digital transformation in procurement can enhance supplier relationships
Edmund Zagorin, CEO and founder of Bid Ops, believes that procurement’s biggest opportunity in the next ten years is supplier relationships – understanding them better, creating data around them, setting KPIs, and understanding how they drive business outcomes. “I would make the case, which is maybe a bit controversial, that optimizing for efficient price negotiations is the most exciting digital transformation priority in procurement.”
Bid Ops believe that price negotiations from a data standpoint are a major problem for procurement. But the right machine learning models can benchmark and create meaningful estimates and recommendations on price.