The Internet of Things, Predictive analytics, Robotic process automation (RPA) and Social sourcing are Transforming Procurement through Technology.
Technology is the major catalyst for change in every business process. Every step of business is being reshaped by the technology and procurement is no exception. Boosting market coordination, introducing new suppliers, Enabling better compliance, increase capacity and speed, minimizing risk and increasing trust by removing human error are the major opportunities provided by Emerging Technologies. Performance of the buyer’s organization as well as the performance of the suppliers is enhancing rapidly, helping to improve the buyer-supplier relationship, collaboration and innovation..
The most widely implemented technologies are related to savings tracking and spend analytics. This is due to the increased pressure for spending cuts and streamlined processes in today’s challenging economic climate. Now a day’s key performance indicators (KPIs) that procurement functions are measured by are mostly related to Cost performance. The top four KPIs for Procumbent functions used by companies are cost savings realized, followed by revenue impact, cost savings identified and cost avoidance.
Major technological advancement in procurement are Automation, Reporting dashboards, Contract management systems, Supplier performance management and Market intelligence software. The highest adoption of these solutions was seen among retail/consumer goods and manufacturing industries, and companies that outsource parts of their operation.
Procurement decision-makers feel that automation is the future for the function. Process enhancement, automation and talent development are the biggest investment priorities for procurement professionals. Companies with decentralized procurement are more likely to consider process enhancement a top priority than those with centralized operations.
Additionally, Robotic process automation (RPA) is quickly emerging as a disruptive technology in which companies are looking to invest in the procurement industry. RPA is capable of delivering cost savings, enhanced accuracy, productivity gains and increased compliance. While RPA left many people feeling threatened by the idea of robots taking their jobs, workers at companies where RPA is already installed are embracing the technology since it frees them up to focus on more innovative and strategic tasks.
Looking at the procurement industry, it is evident that there are three emerging technology trends that are poised to have an impact are the Internet of Things (IoT), Predictive analytics and Social sourcing.
According to Gartner, IoT will “significantly alter how the supply chain operates.” This specifically relates to how supply chain leaders access information. IoT will further allow enterprise resource planning and supply chain management to work together by connecting people, processes, data and things via devices and sensors. IoT in the supply chain and transportation industries is part of today’s larger picture digital business landscape by which connected devices enable organizations to work smarter, plan better and foster more intelligent decision-making processes.
Predictive analytics tracks purchasing patterns over time to help forecast a direction of travel and determine where a certain line is headed. This information allows teams to anticipate problems and intervene before it’s too late. Procurement teams will benefit from this by staying ahead and responding proactively.
Social sourcing is the process of finding suppliers through the use of social media, social platforms and social networks. Procurement team use social media profiles, blogs, and online communities to find and search for supplier’s data and information. It is also often used as branding and building an image around the organization.
Procurement leaders who do not recognize and embrace its impact are likely to fall behind. With many processes fit for automation, companies will demand that their procurement efficiency keeps pace with their rivals. This will be critical for long-term success, so let’s be sure we and our business is ready.