New technologies are impacting all functional business areas, including sales, marketing, and strategic placement. One of the functional business areas most affected is procurement.
Machine learning, artificial intelligence, data analytics, and the cloud are just some of the forces that are revolutionizing and redefining the supply chain, as they are harnessed to help shrewd C-suite executives to succeed in the face of an increasingly uncertain geopolitical landscape.
In this area, technology has already influenced processes such as:
- requests for proposals and quotations,
- shipping, and
- contract management.
The future of procurement will undoubtedly continue to be affected by new developments in automation, the cloud, and big data analytics, which will further change the way companies source, manage, and pay for what they need.
The effects of the pandemic on the supply chain
The Covid-19 pandemic affected businesses everywhere and caused massive upheavals in the global economy.
Economies were severely affected at both national and local levels, leading to the breakdown of numerous business sectors and to reduced consumer spending in many areas. The pandemic lockdowns also had a severe impact on the supply of goods and services worldwide.
Fortunately, agile management approaches that leveraged technology enabled many procurement teams to rapidly change their working models and to adapt to the times.
The companies that survived and thrived during the crisis had faster, leaner decision-making processes that enabled them to reduce the risks to their supply chains and maintain their commitments to customers.
As a result, customer organizations today are willing to pay more for services (or products) with low risk profiles rather than simply paying less for products with inherent risk elements.
Digitalization and the adoption of artificial intelligence
Transitioning your organization onto digital technologies will help you meet the needs of your customers, and are becoming crucial in different sectors: healthcare, retail, finance, insurance, law, and education.
Digitalization is essential for continued business performance and productivity. Organizations must look for ways to differentiate themselves by exploiting emerging digital advantages: automation, on-demand models, free models, e-commerce, m-commerce, and many others.
The blockchain is rapidly becoming a crucial element of digitalization. Its use in procurement means that all parties along the supply chain have full visibility of the entire process, guarantees of traceability and transparency, and a high degree of security.
The blockchain also guarantees various operations in banking, insurance and legal services. For example, developments in the blockchain improve the transparency of transactions, protect sensitive customers and private financial information, and ensure the reliability of services.
In addition, the use of the blockchain can increase operational efficiency and reduce service interruptions.
Machine Learning and Robotic Process Automation (RPA) are two ways in which automation is influencing procurement. Machine learning studies past behaviour to automate specific tasks, such as inventory management and spend analysis. Software (or bots) can then be programmed to automate many of the back office processes involved (RPA).
The dramatic strides being made in artificial intelligence are also increasing the efficiency of:
- Supplier information management
- Supplier risk management
- Contract management
- Spend analysis
- Automatic payments
Together, these technologies and others, such as Software as a Service, 3D printing, 5G and the Internet of Things will revolutionize the supply chain by simplifying and automating it from end to end.
Collaboration and sustainability
The escalating number and severity of adverse climate events has galvanized the discussions around sustainability, changing organizational mindsets, and fuelling talk of responsible resource consumption and responsible production.
Together with the increased focus on environmental, social and governance (ESG) practices by investors and governments spurred on by public pressure, it has become more important than ever for organizations to adopt sustainable procurement practices.
Collaboration is a key element to achieving ESG targets as well as supply chain efficiency and performance and is essential among partners in order to meet the complex and diverse demands of procurement, today and in future.
By creating strategic partnerships with suppliers, organizations can better meet their short- and long-term supply chain requirements.
A unique solution
Procurement is at the heart of your business and when you apply effective inventory management techniques, robust cost management and exploit the benefits of new technology, it is the area that enables you to maximize the agility and resilience of your organization.
Today’s market demands mean you need a collaborative, digital and AI-supported platform to enable you to uncover more cost-savings and greater efficiencies in the procurement of materials, goods, and services. If this platform also leverages the benefits of the cloud, including flexibility, scalability and cost savings it becomes a must-have for every hard-pressed CFO’s arsenal.
Contact us about our solution to support your supply chain and compliance requirements.