Scalability, sustainability, and agility are the mantras for successful businesses in today's volatile markets. The pandemic and geopolitical tensions in recent times have taught us that global supply chains are fragile, and procurement functions can no longer be merely transactional. A robust future focused procurement team that is strategic is essential to anchor you in the whirlpool of complex global supply chains, constantly evolving regulations, and ever-present market volatility. This is where the digital transformation of this essential function comes in. It turbocharges this shift from transactional to strategic by freeing up key personnel to think more strategically while empowering them with data driven insights.
Digital transformation strategies for procurement function
By automating routine procurement processes like generating purchase orders, handling invoices, and managing contracts, organizations can minimize human errors and shorten the time it takes to complete procurement cycles, freeing up procurement professionals to focus on strategic activities rather than on administrative work.
Digital tools are also able to pinpoint cost-saving opportunities and augment inventory management capabilities. This in turn results in major cost savings for the organization, a key procurement KPI. For example, Amazon Business’s digital suite allows real-time budget tracking and pre-purchase approvals, reducing overspending and administrative overheads. Similarly, Walmart’s adoption of an advanced e-procurement platform led to significant cost savings through bulk purchasing and improved supplier negotiations.
Visibility and transparency are two other factors that are used to evaluate the performance of a procurement team. Digital transformation enhances the transparency of procurement processes while centralized digital platforms provide real-time tracking of procurement activities – from request for proposal to payment – enabling teams to quickly identify bottlenecks, inefficiencies, and risks. This visibility fosters trust among stakeholders, enhances compliance with regulatory requirements, and reduces the risk of fraud or unethical practices.
Leveraging AI and advanced analytics for procurement function
AI and ML, predictive analytics, and mobile procurement solutions are revolutionizing the procurement landscape by their ability to monitor supplier risks and market shifts in real-time. This proactive risk management allows procurement teams to adjust strategies swiftly, ensuring continuity and resilience.
Procurement teams have always been data driven. Data and comparative analytics of suppliers are its lifeblood. So, advanced analytics and predictive analytics become obvious matches for procurement. These technologies facilitate demand forecasting, supplier performance evaluation, and spend optimization. And the upside? Procurement decisions are based on facts or data rather than intuition or relationships.
For instance, AI can predict demand fluctuations to avoid stockouts or overstocking, while analytics tools help benchmark costs and timelines against industry standards. This data-driven approach enhances agility and supports continuous improvement in procurement performance.
Streamlining supplier onboarding and collaboration with procurement automation
Suppliers often view the onboarding process of large organizations with trepidation. Procurement automation simplifies this process through integrated supplier relationship management (SRM) tools. These tools streamline supplier onboarding, contract management and performance tracking. A good example is how Walmart’s digital procurement transformation led to more reliable supply chains and better negotiation outcomes. Such relationships are vital for achieving mutual financial benefit while fostering innovation. Innovation from the supplier's end is often a function of being collaborative and inclusive.
As organizations grow and markets evolve, procurement functions must scale efficiently without proportionally increasing resources. Digital solutions are inherently scalable and allow you to grow without increasing the head count of your procurement team.
At the same time, it’s increasingly required by regulations to track supplier emissions and their ethical standards. So make sure to build environmental, social and governance (ESG) criteria into your digital strategy from the start.
Wrapping up
Digital transformation isn't just about keeping up with trends. It’s about thriving in a constantly changing world. Every effort leading to optimization and efficiency matters in the long run. Consider digital transformation as your tool to enhance efficiency, cut costs and manage risks better, and make your procurement functions a true strategic partner to drive growth.
Early adopters are already seeing tangible benefits from digital procurement. It’s time to embrace the change and accelerate your digital journey.
How can Infosys BPM help?
Infosys BPM offers Sourcing and Procurement Services, providing solutions to help businesses transform and succeed in a dynamic environment. We empower businesses to develop innovative digital solutions, leading to sharper strategic understanding, operational excellence, and improved customer interactions.
