Bringing supplier management into the digital age

This article references content from Deloitte’s Global Chief Procurement Officer Survey published in February 2017. Their survey combined opinions of 480 CPOs from 36 counties across the world representing organizations with a combined turnover of $4.9 trillion. The full report is available here and is well worth reading.

For those that are focused on the digital agenda, I have pulled together some data points and quotes from Deloitte’s report that you may find of interest.

The digital agenda

 “Digital transformation will be a strong enabler for economic growth and productivity—reducing the operational procurement work, amplifying the strategic procurement work, and allowing resource investments to focus on higher value added activities.”

The objective of digital is to move people up the value curve.

With today’s digital applications Source to contract is becoming predictive, Purchase to pay is becoming automated, Supplier management is becoming proactive, and these are all empowered by analytics and strong operational management.

Procurement should consider the development of “always-on” digital supply networks (DSNs) which are tightly integrated and connect the traditional silos across the supply chain. These DSNs should provide for autonomous, real-time decision-making using a continuous flow of information; supplier, partner, and customer collaboration to link and synchronize; and data-driven optimization through use of prediction, visualisation, and artificial intelligence in everyday operations.

For those who are ready to reach for the stars, cognitive purchasing, machine learning, robotic process automation, blockchain, artificial intelligence, and even the translation of the digital to the physical (3D printing) are all readily available, and are ready today for deployment.

However, delivering tomorrows technology means addressing todays digital barriers—especially data quality and integration.

Addressing such foundational activities are often not understood by those going to market for the end solution who are typically focused on UX functionality.

So for those considering the purchase of procurement technology, please take a moment to read about the barriers to digital to ensure your shiny new app does not become the next while elephant in the organisation.

Main barriers to the effective application of digital

When Deloitte asked CPO’s “what are the main barriers to the effective application of digital”, their answers can be summarised as data, people, and systems.

Each of these are readily solvable in the right order, (which is not to purchase new tech, realise the data won’t support the outcomes, then blame people for poor adoption!).

Data

• 49% Quality of data
• 42% Lack of data integration
• 19% Availability of data

People

• 29% Skills/capability of analytics resources
• 26% Limited understanding/ knowledge of data technology
• 23% Limited senior stakeholder endorsement and prioritisation
• 21% Availability of analytics resource

Systems

• 29% Current technology
• 18% Poor systems adoptions

When barriers to digital procurement are examined on a regional level the themes of data quality and integration are repeatedly cited as limiting factors. Why is this the case?

Because tech purchasers are so focused on the application outputs that insufficient attention and budget is allocated to the solution of available inputs. At HICX we see this in many RFP’s that come to us. We then have the task of client education during a purchasing process, which, at this point is perceived as scope creep. The desire to address foundational deficiencies in an end user solution is challenging to business sponsors when the message comes from the vendor.

• North America - 56 percent of CPOs cited quality of data as the main barrier to effective application of digital technology.
• South America - Lack of data integration has been reported as the main barrier to effective application of digital technology.
• EMEA - Improvement to the quality of data is seen as key in order to make analytics and renewal of strategic procurement tools into reality.
• APAC - 43 percent of CPOs gave quality of data the main barrier to effective application of digital technology.

So how can you bring supplier management into the digital age?

Change the way you think about deploying digital. Here are three recommendations from the report.

1. Develop a specific digital procurement strategy, objectives and targets to enable 100 percent of your organization.
2. Run a digital procurement lab to create, test, align and share your digital procurement strategy with your procurement leadership and key stakeholders. Ensure the strategy is refreshed quarterly.
3. Establish an incubator team to embrace and pilot digital technologies from within. Have them pick one or two areas to focus on and be agile in testing, succeeding (or failing), and either scaling up or moving on. 

About HICX

HICX Solutions help the world’s largest and complex organizations digitize their supplier management activities. Save money, ensure compliance, and mitigate risk with HICX Solutions.