Retrieved from https://www.msg-advisors.com/studie-digitalisierung (accessed: 16 September 2018). For example, an industry consortium including ship builder Maersk is piloting a collaborative project to test the potential for using 3D printing as an alternative to storing thousands of spare parts on ships and in offshore facilities. 10 Benefits of Digital Procurement In our experience, these three problems share the same root cause: starting too small, usually by looking for the right off-the-shelf solutions for single pain points. Retrieved from http://downloads.cfsm.de/Studien/2019/Barometer%202019%20-%20komplett.pdf (accessed: 2 December 2020). Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. Advanced Studies in Supply Management. A 2018 report by research firm The Hackett Group indicates that world-class procurement organizations can achieve savings of 70% or more per order through their embrace of next-gen tech. The third cluster of tools includes those ranked high in importance but lower in satisfaction, largely because they are less mature or highly complex. Those that wait to digitize procurement risk being outmaneuvered by more agile rivals. The mining companys road map therefore attended not only to digitizations technical architecture and data management, but also to creating a culture that came to embrace digitization. For example, it is making it possible for companies to share warehouse space and trucking capacity. (2020): Statistik fr Wirtschaftswissenschaftler, 4th ed., expert, Tbingen. https://doi.org/10.1007/978-3-658-35449-7_4, DOI: https://doi.org/10.1007/978-3-658-35449-7_4, Publisher Name: Springer Gabler, Wiesbaden, eBook Packages: Business and Economics (German Language). Digital transformation Building this structure involves many tradeoffs. The impact from this approach translates into many kinds of long-term value. In fact, many elements of a digital procurement strategy are important input to a firms digital roadmap. Belisari, S., Appolloni, A. and Cerruti, C. (2019): Positive and negative impacts of the adoption of eprocurement solutions: The Italian market case, International Journal of Procurement Management, Vol. ), you might think the world has tossed aside its analog past in favor of the shiny digital future. But an examination of the interdependencies revealed that the major problem was actually the number of approvals that purchases required, which often were contingent on additional approvals. Several new profiles are critical in the digital factory, raising the question of how best to source them. 139164. Digital Transformation in Procurement - PLANERGY Software The problem was that all three parties lacked access to all the relevant data. 423440. Bayazit, O. Iterative sprints allow for a maximum of user involvement, transparency, and flexibility in developing solutions that address the real problems procurement users have with predigital systems. WebDeloitte US | Audit, Consulting, Advisory, and Tax Services Meanwhile, the CFO had made adjustments to the budget that altered targets. This transformation touches every industry, in both the demand and supply markets. This disciplined model requires commitment but is far more likely to yield value over both the short and long term. Digital procurement boosts efficiency and shifts the role of Chief Procurement Officers (CPOs) and other procurement professionals away from cutting costs and toward more advanced capabilities focused on creating lasting value for the company. Digital transformation means successfully applying a technology's support and applications to enhance work efficiency. 219241. As procurement takes on this new role, business units will start coming to them with different questions. These tools allow procurement teams to easily share data and help cross-functional teams codevelop solutions with suppliers and internal stakeholders. What kind of data, analytics, systems and technology do you need to support that role? The second step is creating the vision for procurements future rolesay, three to five years from now. Manufacturers of the product, their suppliers, and retailers can use these new streams of data to refine the product and create new ones. (2010): What is the value of an IT eprocurement system?, Journal of Purchasing and Supply Management, Vol. (2016): Vorstudie Einkauf 4.0 Digitalisierung des Einkaufs. The economic and strategic benefits of digitizing procurement are real, but the proliferation of competing technologies has made it difficult for companies to figure out where to start. Nicoletti, B. For others, the return on investment (ROI) isnt clear, or the executive team doesnt understand why procurement should be a strategic priority for information technology investments. PROCUREMENT Taking the time to master emerging procurement technologies, engage your entire organization in their implementation, and focusing on value will help make sure your procurement team is a key part of your business success, both today and in the digital-driven future. One key signal is the amount of capital investors are pouring into the development of digital procurement tools, betting they will produce significant value. Radell, C. and Schannon, D. (2019): Digital Procurement Benefits Go Far Beyond Efficiency, Supply Chain Management Review, March/April 2019, pp. Brynjolfsson, E. and McAfee, A. It has automated the purchasing procedure and has furnished excellent results for both, the companies and the suppliers. Rahim, M. M., Jabberzadeh, M. and Ilhan, N. (2020): Unit of Analysis in DigitallyEnabled Electronic Procurement Research: A Literature Analysis, in: Sandhu, K. Smart, A. WebMany organizations struggle with managing their suppliers. Thats a crucial part of the result: an organization that is far more capable of continuous improvement. Research conducted by Procurement Leaders shows that a fully automated procurement function could save the Global 5000 up to $86 billion annually. Ancarani, A. and Di Mauro, C. (2018): Successful digital transformation needs a focus on the individual, in: Schupp, F. and Whner, H. 2, pp. Digitizing procurement wont do a company much good if its people dont think it helps them get their work done. Will supply chain staff embrace demand forecasting? Stay up-to-date with news sent straight to your inbox, Sign up with your email to We conclude with a few practical steps for creating a digital strategy and roadmap. To identify the user journeys that are the most important to digitize, a company can start by understanding which roles stand at the center of the procurement ecosystem and which are more peripherali.e., who interacts with the most or fewest other people along the S2P process (Exhibit 2). Brem, A. and Tidd, J. Fraunhofer IML and BME e.V. The rapid emergence of shared data platforms and emerging technologies created an opportunity for procurement to speed innovation. February 04, 2021 By Amit Ganeriwalla , Saurabh Harnathka, and Nicole Voigt Metals and mining companies are investing in digital technologies across the value chain, from operations to procurement to sales and marketing. The paper aims to identify the changing (2010): eProcurement and its impact on supply managementevidence from industrial case studies, International Journal of Logistics Research and Applications, Vol. The digital transformation of businesses is creating new products, processes, and services. As organizations transform their direct procurementprocesses to a digital platform, careful andcomprehensive consideration must be made acrossthe How to report and analyze indirect spend to identify savings opportunities. Finally, procurement executives increasingly will act as stakeholder managers and orchestrate agile teams to operate across the business, increasing the need for collaborative skills. But the business case for digital procurement has become increasingly clear as companies gain experience with these technologies and track their performance. Twenty years ago, sales representatives purchased market reports to glean customer insights and predict future demand for a product. Bethlehem, J. and Biffignandi, S. (2012): Handbook of web surveys, Wiley, Hoboken, New Jersey. We work with ambitious leaders who want to define the future, not hide from it. 415436. Digitization and greening have become the characteristics of social and economic development. David Schannon is a partner in Bains Performance Improvement practice and is based in the companys Silicon Valley office. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. (ed.) First, the emerging theorization on digital supply chain is introduced and focuses on innovative technologies (big data, cloud computing, internet of things, etc. There are, however, still comparatively few studies that reflect the current state of digitization in purchasing in the Germanspeaking countries. Automating purchasing processes frees resources for more strategic work, such as agile partnerships to help implement the companys digital vision. Leading companies already are harnessing these technologies to speed problem solving and generate greater value for the business. Charting a path to success is tough when you dont have a map, a compass, or any idea whether youre even on the right road. Are finance teams tech savvy and willing to use new invoicing tools? Then there is the proliferation of data and the rise of the Internet of Things, coupled with advances in automation, analytics, and digital technologies.These developments create many new opportunities for procurement, such as allowing companies to learn more about supplier capabilities and customer requirements, and helping Successful companies wield deep understanding of the supply market and digital technologies to create powerful insights. Digital procurement The initial goal of an automation assessment is to enable quick wins by automating current processes. 3, pp. In that role, procurement teams will need to develop more flexible contracts that incorporate greater tolerance for risk. Frost, I. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that youve provided to them or that theyve collected from your use of their services. Digital technologies are allowing companies to share supply chain information and assets in new ways. For instance, with so many delivery routes on the platform, there may be opportunities to share vehicle space on routes used by multiple companies. To fully exploit these insights, companies need deeper interactions with upstream suppliers and customers downstream. 219226. One supply chain process that requires such interactions is collaborative forecasting informed by machine-learning-based algorithms, which use real-time information on buying patterns to identify new parameters that affect demand. The authors wish to thank Mauro Erriquez for his contributions to this paper. But real enthusiasm for digitization is even more valuable, and takes more effort. Digital procurement solutions not only create an opportunity to improve efficiency; they also pave the way for procurement teams to play a strategic role in accelerating innovation. This means that companies that are digitizing their supply chains or planning to do so need to promote new roles and supporting systems. Trkman, P. and McCormack, K. (2010): Estimating the benefits and risks of implementing eprocurement, IEEE Transactions on Engineering Management, Vol. The system stores and manages contracts digitally and monitors operations involving Flex, its suppliers, and its customers in real time. The third step is a roadmap to implement the vision for a new role for procurement. Organizations should also be thoughtful about how large the team should be. Most of procurements time back then was taken up with tactical activities and buying products that the business units ordered. van Weele, A. J. IBM, for instance, used RPA to resolve blocked invoices, reducing resolution time to 90 seconds, on average, from 32 minutes previously. Download preview PDF. WebAdvantages of Digital Procurement. Unable to display preview. As confidence builds, iteration can accelerate. Demystifying Digital Transformation for Procurement - Digi Match trend and threats to existing strategy; Procurement executives can come up with a more realistic estimate for return on investment by calculating the direct savings from the tool, indirect savings that can be achieved only with the tool in place, and any qualitative benefits such as error reduction or increased speed. That enables a company to prioritize the user journeys that can be digitized today, and make informed choices about which mid- to long-term architecture investments are required to unleash the full potential identified in the user workshops. That requires a clear roadmap. 1Procurement Leaders data was in euros, and was converted to US dollars using the Internal Revenue Services 2017 exchange rate of $0.923 per euro. For risk management, stakeholder management, category management and information sharing, that figure rises to more than 70%. For example, savvy digital companies should continuously test new technologies and develop prototypes with partners and their customers. 7, No. Technology offers new ways of sharing information and assets, meaning managers will have to rethink their relationships with suppliers and competitors. Digital supply chain: challenges and future directions Davenport, T. H. (2005): Thinking for living: How to get better results from knowledge workers, Harvard Business School Press, Boston. SnchezRodrguez, C., MartnezLorente, A. R. and Hemsworth, D. (2020): Eprocurement in small and medium sized enterprises; facilitators, obstacles and effect on performance, Benchmarking: An International Journal, Vol. The importance of interdependencies in a digital context is hard to overstate, as illustrated by the mining company. Zafari, F. and Teuteberg, F. (2018): Der Weg zum Einkauf 4.0: Herausforderungen bei der Automatisierung und Digitalisierung im Einkauf eine multimethodische Analyse am Beispiel der Logistikbranche. With the advent of the Industry 4.0 era and the rapid development of digital Improved collaboration across functions and better decision-making through advanced analytics will create further savings. That means mapping out the details of how people involved in the procurement process work, tracing each step in the journeys that these procurement users follow in order to get their tasks done. Batran, A., Erben, A., Schulz, R. and Sperl, F. (2017): Procurement 4.0, Campus, Frankfurt/New York. (ed. Where Could TomorrowS Procurement Have The Greatest Impact? Companies pioneering collaborative supplier relationships use performance-based contracts to achieve a specific goal, like the new manufacturing technique described earlier. Spend Matters, 22 February 2018. Where the best opportunities for savings are in indirect spend. But to provide these new offerings, companies must share information and assets with each other in ways that were previously off-limits. Purchase, S. and Dooley, K. (2010): The acceptance and use of eprocurement systems, International Journal of Logistics Research and Application, Vol. Procurement executives can begin building a sound digital strategy by choosing two to four digital tools that have a proven track record in the market. The effort was part of a broader IBM initiative to automate every procurement process possible. 1/2, pp. But for procurement departments of all sizes, embracing and implementing digital procurement technology comes at a price some arent yet willing, or able, to pay. 2, pp. Procurement executives are standing at a crossroads today. Digital procurement teams can also help companies rethink their operating model, partnerships, talent and culturebefore rivals outmaneuver them. receive updates from our blog. Strategy& (2019): EMEA Digital Procurement Survey 2019. Procurement executives can start to assess the opportunity these technologies offer by understanding how they support three broad areas of change: automated processes, frictionless collaboration with suppliers and other stakeholders, and smarter procurement based on richer data sets. Procure-to-Pay Transformation Guide Hochschule fr Angewandte Wissenschaften, Hamburg, Deutschland, You can also search for this author in How to implement transformations for long-term impact https://doi.org/10.1007/978-3-658-35449-7_4, https://www.mckinsey.com/business-functions/operations/ourinsights/shifting-the-dial-in-procurement, https://www.msg-advisors.com/studie-digitalisierung, http://www.cfsm.de/fileadmin/Downloads/Studien/I40/Studie_Industrie_4_0_2016.pdf, http://downloads.cfsm.de/Studien/2019/Barometer%202019%20-%20komplett.pdf, http://downloads.cfsm.de/Studien/2020/Barometer_2020_komplett.pdf, https://www.bme.de/fileadmin/_horusdam/4190-Vorstudie_Einkauf_40.pdf, https://www.onventis.de/wp-content/uploads/2020/09/WEB-Onventis-Trendbarometer-2020.pdf, https://www.zycus.com/attachments/article/638/The%20Drivers%20and%20Barriers%20to%20Effective%20User%20Adoption%20of%20Procurement%20Technologies%20-%20Research%20Report%20by%20ZYCUS%20and%20MSU.pdf, https://www.strategyand.pwc.com/de/de/studien/2019/emea-digitalprocurement-survey-2019-preview-trailer/emea-digital-procurement-survey-2019-trailer.pdf, https://www2.deloitte.com/content/dam/Deloitte/de/Documents/operations/Deloitte-Global-CPO-Survey-2018-Interactive-Report.pdf, http://spendmatters.com/2018/02/22/state-procurement-part-3-solutions-procurement-technology/, http://mkwi2018.leuphana.de/wp-content/uploads/MKWI_178.pdf, Tax calculation will be finalised during checkout. Umbenbauer, B. and Younger, L. (2018): Leadership: Driving innovation and delivering impact. Baily, P. et al. Technology spurs new and creative solutions to our oldest problems, but ultimately, the real digital transformation in procurement, and the success it brings, is driven by people. Advanced category strategies help procurement teams reduce costs by buying better and spending better. Instead of asking the procurement team for a list of suppliers vetted for quality and price, some asked their cohorts for suggestions and others chose products after searching online. The goal is to increase productivity, identify and create sources of enduring value, and streamline business processes to improve efficiency. Second, digitization may have been driven more by what technology could do than by the real value it could create. Theres little question that when people can see that digital procurement is eliminating pain points, theyre much more likely to support it. That group includes contract life-cycle management, demand forecasting and network or market data intelligence (see Figure 3d). Global investment in digital procurement including venture capital, private equity and other forms of investment totaled $475 million in 2017, up from $378 million in 2014 (see Figure 1). The challenges facing procurement teams are complex and ever-evolving. (2018): The State of Procurement (Part 3): Solutions and Procurement Technology. Schoenherr, T. (2015): The Drivers and Barriers to Effective User Adoption of Procurement Technologies, Zycus/Michigan State University Whitepaper. See appendix (PDF). (2018): Purchasing & Supply Chain Management: Analysis, Planning and Practice, 7th ed., Thomson Learning, Andover. (accessed: 1 December 2020). As a result of the evergrowing availability of new technologies and decreasing cost of computing power, there are constant fresh starting points for creating (PDF) Procurement Transformation in Digital World Artificial Intelligence (AI) is a range of analytical techniques that allows a computer to detect relationships, predict outcomes, and often act based on the patterns in data without being explicitly programmed to do so. ): Handbuch Beschaffung, Hanser, Munich, pp. This report explores how digital tools can increase the efficiency and effectiveness of procurement and, importantly, how procurement can play a more strategic role in accelerating innovation and contributing to the companys broader digital direction. Procurement professionals who are able to make this strategic shift will not just reap big gains in efficiency. She proposed codeveloping a customized manufacturing solution with the two suppliers. 40, No. Retrieved from https://www.strategyand.pwc.com/de/de/studien/2019/emea-digitalprocurement-survey-2019-preview-trailer/emea-digital-procurement-survey-2019-trailer.pdf (accessed: 3 December 2020). The manual tasks have been replaced with efficient procurement systems. It will require managers responsible for developing supply chain relationships, such as account managers or supply managers, to adopt a boundary-spanning mindset in order to facilitate collaboration, experimentation, and trust across organizational boundaries. (2014): Strategic sourcing management, Kogan Page, London. Centralized control with decentralized security. CPOs have an opportunity to start changing the nature of their conversations with business unit leaders by focusing on solutions rather than products. What solutions and vendors are procurement executives in your industry adopting? Originality/value. But by bringing procurement leaders, heads of related functions (such as finance or product development), and technologists together, the visioning workshop helped the leaders see that breakthrough technologies, such as robotic process automation (RPA) or natural language processing (NLP), were practical and economical to implement nownot in five years. What processes should be digital and what solutions do you want to implement? PwC Digital Procurement Survey *I have read thePrivacy Policyand agree to its terms. 3, pp. An honest assessment of how able different teams are to use digital solutions will help you focus on solutions that wont hit a roadblock. To establish a definitive data source, the company implemented a collaborative data platform that included contract records, savings opportunities and methodology, key metrics and analysis, and stakeholder signoff. Digital Procurement Research 2020-2021 - Capgemini 25, No. Angeles, R. and Nath, R (2007): BusinesstoBusiness eprocurement: Success factors and challenges to implementation, Supply Chain Management, Vol. Digital technologies also provide a competitive edge by improving the speed and quality of procurement, reducing risk and enhancing innovation. Some CPOs have begun supporting business innovation and helping implement the companys broader digital goals. Overall, the typical digital procurement transformation is a journey of 1824 months, during which the initiatives (indeed, the entire road map) should be regularly reviewed and flexibly adapted as priorities and technologies change. Thats a crucial part of the result: an organization that is far more capable of continuous improvement. Neef, D. (2001): EProcurement: From strategy to implementation, Upper Saddle River, Financial Times/Prentice Hall. Stay ahead in a rapidly changing world. Walmart is experimenting with using live-streaming technology in collaboration with TikTok to offer customers new shopping experiences. Webdefine a customized digital transformation journey for procurement. Digital procurement: For lasting value, go broad and deep 459473. 104115. PDF Ford adopts new automated vision-based inspection of paint jobs in its plants through augmented and virtual reality, the Internet of Things (IoT), and AI.
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