Discover the benefits that Procurement 4.0 can bring to your company
We are in the midst of a digital revolution, where by 2030 it is estimated that 60% of the world's population will access the Internet exclusively through mobile devices.
With the rapid growth of digital media, large corporations are confronted every day with new challenges: new competition, new business models, value migration, intermediation, and disintermediation. The relatively stable competitive environment of the 2000s is a thing of the past.
Today, large companies face threats from all sides, but primarily from the digital era. We have emblematic examples of market leaders that lost their edge due to the timing of their business updates: Borders, formerly one of the leading American bookstores, filed for bankruptcy in 2011; Kodak, defunct in 2012; Blockbuster, the leading American DVD rental chain, disappeared in 2014.
We are witnessing a new wave of digital disruption, where adapting business models is a matter of survival for large corporations, and timing is the critical success factor for maintaining and/or scaling their business.
The procurement area is challenged once again to capitalize on these transformations. They represent an opportunity to cross the next frontier of operational process and cost optimization, as well as to strengthen the advances made in recent years as a strategic driver within the organization.
Furthermore, technological advances arising from this digital revolution will bring possibilities such as: digitally enabled collaboration with stakeholders (both internal and suppliers), automated and robotized processes and activities, partnerships with startups, among others. These topics are being discussed in the Procurement Club meetings with Procurement leaders from the market's leading Supply Chain organizations.
Digital Procurement
The digital revolution has profoundly affected organizational processes, and it is no longer a surprise to hear that a given process has been automated with robotics—and it is no different with procurement.
According to a recent survey by Level Group, 84% of procurement departments believe that digitalization is the next step for the sector. However, only 15% of large global Procurement organizations have created an effective plan to get there. Proper planning to reach this next technological level is essential to ensuring Procurement's success.
We know that this is a highly sensitive area, increasingly recognized as the guardian of compliance best practices. Changes to its processes will certainly require deep internal discussions that may impact the timing and ensure the success of its contribution to the new “digital era”.
So, to begin this journey toward Digital Procurement, it is worth considering the following technologies and their recent advancements:
Data Management
The vast volumes of data available inside and outside the organization and machine learning algorithms can be used to maximize the breadth of procurement leverage, but they also pose regulatory challenges (GDPR – General Data Protection Regulation).
Blockchain
Blockchain can be used to secure sourcing channels and origin, contracts, and payments, as well as to analyze market trends on a large scale.
Robotics and Artificial Intelligence
The advent of robotics will have a sustainable impact on labor costs and is opening new opportunities in optimizing transactional processes, which are a major bottleneck for the department.
Connected Objects
The “Internet of Things” is entering the scene in traditional industries and revolutionizing direct costs, maintenance purchasing, and investment plans through digital asset management.
3D Printing
Production costs, supply channels, and the procurement of small batches, spare parts, and prototypes are likely to be completely reconfigured.
Drones
Last-mile logistics costs and preventive maintenance costs for hard-to-reach infrastructure can, from now on, be optimized.
These examples are just a few of the seemingly endless opportunities to reduce costs and improve performance across procurement processes.
For procurement directors, now is the time to become drivers of this new era, thereby strengthening the strategic position achieved over recent years. On the other hand, failing to take a leading role in this new moment could lead to a loss of position, the possible extinction of the purchasing function, and the decentralization of procurement processes back to non-specialized areas.
