Digitalization of procurement processes brings a host of benefits to business enterprises, both direct and indirect. With digitalization enabling businesses to use and manipulate data, automate processes, conduct predictive analyses of demands and trends, and be more resilient and sustainable, there is also a drastic improvement in procurement efficiency. The business outcomes of such progress in efficiency include higher revenue, more significant competitive advantage, and greater business flexibility.
Using business data to make crucial decisions and integrate better with enterprise systems inside and outside the organization enables the latter to raise procurement efficiency across the value chain. More excellent and better strategic sourcing, automation of accounts payable, procure-to-pay automation, risk management, supplier collaboration, market intelligence, contract lifecycle management, impact tracking, spend management, and margin optimization all contribute to boosting production efficiency. And all of these are made possible by digitalization, automation, and optimum use of available data.
Digitalization also helps business ventures leverage their sourcing strategy, costs, and overheads. It also makes it possible to optimize the supply chain and reduce labor and staffing costs. According to a ProcureCon Europe Benchmarketng Report released in 2018, around 40% of the procurement officers surveyed said that the biggest benefit derived from implementing digital procurement technology had been the increase in efficiency. Furthermore, 66% said automated procurement processes were already being used in their firms for comprehensive spend analysis.
The procurement functions, besides spend management, that were most impacted by digitization and automation also included contract management, payable accounts, automation of requisition to purchase orders, automated sourcing, and supplier information management. Digitalization can thus be used directly for supply chain optimization, not only to reduce labor costs but also to slash or eliminate losses that arise from human errors.
Forward-thinking businesses are already using voice-activated procurement, Artificial Intelligence (AI) for negotiation assistance, blockchain for information security and sharing, and Robotic Process Automation (RPA) to prepare procurement orders. Pocurecon found that while 75% of business organizations were already using procurement automation for predictive analytics and 64% for the preparation of orders, digital procurement has been accelerating at a rapid pace. These are some concrete ways business enterprises can make their procurement process more efficient by resorting to digitalization.
