Want to close the procurement technology gap?

Many organisations have yet to invest in technology that is rapidly becoming essential to help procurement professionals do their jobs effectively, as well as keeping the business safe from cyber-criminals. It’s down to the function to demonstrate the benefits and build the case for investment.

Technology has the potential to significantly improve efficiency and free up time for those working in procurement functions. According to the 2024 Indirect Procurement Report , produced by RS in conjunction with the CIPS - The Chartered Institute of Procurement & Supply , procurement professionals responsible for supplies supporting maintenance, repair & operations (MRO) using digital procurement services report a wide range of benefits.??

These include reduced time to order products (29%), better spend visibility (26%), improved management information (26%) and enabling easier identification of off-contract spend (25%). A similar number (24%) say it has helped them to consolidate the supply base.?

Many struggle to find the information they need; 18% report a lack of spend visibility and 30% say they have issues with contract compliance.*

Yet the survey suggests that only a minority of organisations (38%) operating in the MRO space are making use of eProcurement systems, and a significant percentage still rely on spreadsheets (29%) and expenses (18%) to pay suppliers. Not surprisingly, many struggle to find the information they need; 18% report a lack of spend visibility and 30% say they have issues with contract compliance.??

Michael Lewis , Professor of Operations and Supply at the University of Bath School of Management, says that for those organisations which have yet to adopt it, a good starting point is basic robotic process automation, which allows the sharing of information across functions. “We still have people sitting in invoicing departments, which is one of the few areas of a business where you actively exchange on a global universal standard, and this inability to connect invoices and workstreams,” he points out. “There are fundamental technologies that need to be in place so we have timely, reliable and consistent data.”??

Organisations are still struggling with that whole supply chain visibility piece, so knowing where goods are coming from and just managing those risks in the supply chain. - Helen Alder (FCIPS) , Head of Knowledge & Learning Development at CIPS.

“Technology is on its way to being a real help,” agrees Helen Alder, Head of Knowledge & Learning Development at CIPS. “Organisations are still struggling with that whole supply chain visibility piece, so knowing where goods are coming from and just managing those risks in the supply chain.” New web-scraping technologies and artificial intelligence (AI) are also starting to deliver additional insight, she adds, meaning there’s potential for more insight for those with the right technology.??

Kate Davies , Global Head of Commercial Services at RS Group, points out that there are several innovative solutions available on the market, away from the established players. “It’s an open marketplace with some dynamic green-shoots organisations and startups starting to come into the market,” she says.??

Inevitably, there are barriers to overcome when it comes to investing in new technology, including a perception that procurement should be saving money rather than costing the business, and a perceived lack of skills to help deliver such projects.??

But it could be that those skills do exist within the business, suggests Davies. “My advice would be to cast your net wide,” she says. “Don’t underestimate colleagues who can support you, for example by selecting a company to come in and map processes to find out what’s needed. They might be able to automate some of the more time-consuming tasks that take up quite a lot of the working week.” Taking a more entrepreneurial approach to technology projects can break down some of these issues, she adds.?

Cyber concerns?

Not having the right technology is not the only headache facing those working in procurement. The 2024 Indirect Procurement Report highlights a worrying lack of initiatives to counter the threat from cyber-criminals, with fewer than 23% of respondents saying there is a company strategy in place to tackle these. This could potentially leave businesses facing significant financial and reputational risks.?

“This is a real and present danger for every organisation operating today,” warns Lewis. “Cyber-criminals can shut you down tomorrow.” It’s possible, he concedes, that this could be the domain of other areas of the business, but procurement should certainly be aware of this. AI will only add to the risks organisations face, he adds, as it relies on shared data which will need securing.??

This is something procurement professionals need to lead on, believes Davies, working together with other functions to ensure the business is not put at risk. This means checking suppliers also have the right measures in place to prevent customer data, and possible financial information, from security breaches.??

“The potential risk is huge,” she says. “Certainly for RS, it’s a hygiene factor and it’s been built into our processes for quite some time. We don’t qualify and won’t work with a business if they’ve not been through our cyber qualification scheme as part of their onboarding. But perhaps businesses that don’t buy a lot of services are not prioritising that.”?

A lot of procurement teams are cynical as to whether those tools are going to deliver on their own objectives. Spend time engaging with the team and ensuring that they are on the journey with you. - Kate Davies, Global Head of Commercial Services at RS Group.

Make it happen?

Procurement professionals need to be comfortable making the case for investment in procurement technology and appropriate cybersecurity measures. “It might need to be more sophisticated than saying something is going to save X%,” says Lewis. “A canny operator will use that alongside things like compliance requirements, which could be used as a vehicle for upskilling core invoicing processes. You need to reframe these challenges as opportunities.”?

Davies urges those working in procurement to get the wider business onside when it comes to such projects, including engineers who may be based on production lines and require items quickly. “You need to be conscious about adoption,” she says.??

“A lot of procurement teams are cynical as to whether those tools are going to deliver on their own objectives. Spend time engaging with the team and ensuring that they are on the journey with you. That means if you do invest in technology, it will be used consistently and you will receive a good data set.”?

Implementing new technology can also help showcase just what procurement does and the value it brings to the wider organisation, believes Lewis. “Technology is another vehicle for engaging people,” he says. “It can bring other people who might have to use the system into the procurement activity and, if done well, they see the good work we do. It can have multiple benefits.”?

For more insight on the potential for technology to help procurement professionals, and their use of it, download the 2024 RS & CIPS Indirect Procurement Report here. ?

*Source: 2024 Indirect Procurement Report, produced by RS in conjunction with the Chartered Institute of Procurement & Supply (CIPS)