Risk mitigation is a fact of life in business. If a venture is to prove itself successful it will need to look before it leaps. That means taking a hard look at the services and infrastructure its going to invest in before commiting to digitization and software integration. A misstep in choosing the right improvements to its tactical or strategic operations could spell significant losses for the business. However, market trends have shown not just a surplus, but an overabundance of caution when it comes to the digitization of procurement.
Procurement operations have been one of the hardest hit areas of business in the past 5 years. Multiple historic events have shaken up the industry and shown it to be generally unprepared for a fully digital economy. A recent report showed that only one in five procurement based businesses have completed their digital transformation from classic spreadsheet and paper practices. Many companies surveyed believed that they had already completed the digitization process, when in fact they were still very much underinvested in digital procurement infrastructure.
Procurement Magazine’s Ilkhan Ozsevim provides a succinct overview of the issues facing the procurement industry and the findings of the report:
"Of those surveyed, less than one in five (18%) believe that they have reached full digitalisation. At a time when digitisation is key, less than a fifth that have moved in this direction, is problematic.
These numbers are worrying considering the state of the wider mise-en-scène, and the increasing risks to supply chains and procurement in both ecological and economic forms.
Alarmingly, more than a quarter (28%) said they currently have no plans in place to move towards digitalisation.
With 82% of organisations yet to fully digitalise their procurement processes, it is clear there is still work to be done. But, to ensure they are moving in the right direction, steps can be taken to avert any further harm and ensure the most beneficial outcomes:"
The numbers of Digitization
"The Probrand/CIPS survey revealed that a quarter of buyers are spending the equivalent of one day each week researching IT purchases – “including comparing equipment specifications or checking prices and stock availability.”
This is lost time, lost money and lost potential.
According to the survey, 71% said they spend a significant amount of time emailing with 70% saying the equivalent effort was being spent on calls.
Without digital processes in place 63% are still relying on manual systems as their primary method for order-placing. This is a huge and unnecessary drain on resources."
The research also revealed that:
- 63% of those surveyed are still relying on manual systems
- 23% are spending a significant amount of time leafing through printed catalogues
- 51% of those surveyed were having to wait at least three days to receive a simple PO (Purchase Order)
- 17% said that the process was taking more than a week on average
Malcolm Harrison, Group CEO, CIPS Group has said: “If you’re standing still on digitalisation, you are already falling behind.”Digitizing Procurement: The key to success or failure
Perhaps most concerning is that over twenty five percent of respondents of the study had no plans to digitize their operations and eighty five percent had not reached the digitization benchmark.
While this is dire news for an industry in need of digital modernization, there are things that can be done to reduce the friction of changing a company’s operations, according to the author:
Smarter procurement practices can save you money so you can invest in the projects that generate revenue and increase profits. This can pave the way for improved supply chain partnerships and continued profitability, making any business more resilient to new challenges.
Current SCM is one of the digital resources that can help you achieve that reimagined digitized procurement. One that will allow procurement to evolve beyond its transactional focus on purchasing and become a driver of efficiency and value for the organization. Operational procedures, performance metrics, cost saving implementations, and more can be done within a robust supply chain management software like Current SCM.