Are You Ready for Digital Procurement?

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The answer is not yet, according to a new survey released by JAGGAER in cooperation with the Austrian Association for Supply Chain Management, Procurement and Logistics (BMÖ). Although the survey finds a majority of companies wary of using the newest technologies, including blockchain, robotic process automation (RPA), and digital assistants/chatbots in their procurement organizations, they believe digital procurement has the potential to improve performance and efficiency in their organizations.

The global survey finds that the majority of respondents are making progress toward digitalizing their procurement organizations, but 83 percent of companies are not fully leveraging the potential benefits of digital procurement.

The report, Digital Procurement: Just Hype or the New Standard?, which surveyed 168 companies across multiple industries, also finds that organizations believe investing in digital procurement is a priority. At the top of their list are predictive KPIs and big data analytics. Lower priorities include newer technologies, such as blockchain (36%), RPA (48%) and digital assistants/chatbots (52%). (Seventy-three percent of the survey respondents come from the production sector including automotive, industrial manufacturing and aerospace. The remaining 22 percent come from the non-production and public sectors.)

However, 64 percent of respondents said they have no plans to invest in blockchain, RPA (52%) and digital assistants (48%).

                                                          Key Takeaways

• Digital awareness and literacy are evolving fast: 50% of procurement professionals rate their digital knowledge as up-to-date or excellent.
• The level of equipment varies between more mature and the latest technologies: Only 10 % of organizations have installed Big Data Analysis, artificial intelligence, or smart workflows yet.
• As far as the priorities for investments are concerned, analytics (predictive KPIs and Big Data) top the list. At the other end of the scale where companies have no plans yet to invest are blockchain (64%), 52% RPA, and 48% digital assistants/ chatbots.
• The level of integration is moderate: 22% of organizations do not integrate data from upstream/downstream processes, 60% do it manually, and only 18 % have end-to-end integrated processes.

Source: JAGGAER SURVEY

“These results show that companies are taking a pragmatic approach to implementing new technology, and are waiting to see how ‘first movers’ fare in order to minimize their own risk,” said JAGGAER.

Yet, the survey also indicates that companies believe digitalization in procurement can improve performance and increase efficiency. Respondents said big data analysis (53%), SRM, eProcurement and eSourcing (46%), and future-oriented KPI analysis (40%) have the greatest potential for increasing efficiency in procurement and the value that procurement adds to the entire organization.

Companies are using and integrating data for critical processes such as supplier management, sourcing decisions, supplier management, supplier evaluations and supplier collaboration but integration of the data is still very manual and incomplete. Seventy-eight percent of organizations integrate data but nearly all of them (77%) are still doing it manually by using Excel or downloading/uploading files into their systems.

The survey shows that core processes are well integrated but external data such as financial and supply chain risk information, landed costs, and raw material prices are primarily integrated manually into sourcing decisions or category management portfolios. The least integrated into strategic sourcing and supplier management: supplier’s digital competence, supplier footprint, internal cost, and innovation capabilities.

“New technology is going to completely revolutionize the daily routine in procurement. By implementing modern procurement software, more than half of all procurement organizations have already taken the first big step towards digital end-to-end processes, automation, data consolidation, and using KPIs for strategic decisions. The results of the survey show that many companies are already better-equipped for digitalization than they may realize,” said Thomas Dieringer, managing director of JAGGAER EMEA, in a statement. “The next step is to link data more effectively and use it more intelligently. This will open up many new opportunities for procurement that will give organizations a strategic advantage.”

However, procurement professionals need to be aware of the newest technologies to keep their procurement organizations current and to play a key role in their company’s digital transformation. The survey finds a 50/50 split between procurement professionals that have the required knowledge of the latest technologies and those that don’t understand them.

“Digital transformation is an enterprise-wide endeavor which can never be reduced to one process or department if its full potential is to be developed. However, procurement does have a critical role to play in the digital transformation, and there are two aspects in particular that it must consider and integrate,” according to the report.

These aspects are:

1. Procurement can and should position itself as a facilitator of the company’s digital transformation
2. How best to apply digital transformation principles and philosophy to Procurement

Ultimately, this means that chief procurement officers (CPOs) will need to stay current on the latest and emerging technologies, including blockchain, artificial intelligence, 3D printing, self-driving cars, delivery robots, and the internet of things, that can offer opportunities to improve their procurement organizations and companywide.

But the first step towards digitalization starts at the data. This will require companies to streamline their data and processes for a successful digital transformation, said JAGGAER.