Explore the future of procurement in this comprehensive analysis, which delves into the importance of digital tech and improved supplier relationships in revolutionizing procurement and transforming supply chains.

In brief:

1. Digital tech is pivotal in procurement transformation, enabling quicker adaptation, opportunity discovery, and process acceleration.
2. Intelligent supply optimization platforms address data challenges, enhancing decision-making, efficiency, and cost control.
3. Stronger supplier relationships and improved compliance, facilitated by digital tools, are crucial for a successful digital procurement process.

The past years’ rapid changes have made it clear that businesses must speed up their digital upgrades. Yet, in a study by Harvard Business Review, 92% of procurement leaders described their digital processes as less than best-in-class going into the pandemic.

It goes without saying that to improve your supply chain, you must focus on strategizing smart procurement solutions.

In this article, I'll explore how using digital tech and improving supplier relationships can help revolutionize procurement teams and continue the digital transformation of the supply chain.

The New Landscape of Digital Procurement

The world of procurement has seen a significant shift, and digital automation has emerged as the golden ticket. It’s pushing forward the ongoing digital makeover of the supply chain in 2023.

But it's not just about the technology.

In my opinion, procurement leaders should focus on two important things: getting familiar with new technology strategies and investing in ways to use this technology in all parts of their operations.

This is a big job. It involves transforming a company into a smarter, more data-driven operation.

This means they can quickly adapt to changes, find new opportunities, and speed up business processes to meet important needs.

But it's not just about the company itself. These benefits can be shared with supply chain partners, helping the whole network to become more efficient and effective.

The Power of Digital Procurement Spend Analysis

One of the key areas where digital technology can make a real difference is in spend analysis.

It involves understanding how much is being spent, where, and on what.

Digital technology can help gather this data quickly and accurately, making it easier to identify patterns and make informed decisions.

But data is just the start.

The real power of digital procurement spend analysis comes when this data is turned into insight. This involves using tools like artificial intelligence and machine learning to analyze the data and identify trends, risks, and opportunities.

For example, it might highlight areas where spending could be reduced, or where a change in supplier could deliver better value.

Tackling the Data Challenge

In the realm of procurement, especially when dealing with material inventory, leaders often find themselves wrestling with unreliable data.

Think about this - it's like trying to find a needle in a haystack, but the haystack is your storeroom filled with spare parts scattered all around.

On top of that, your ERP systems which should be your go-to for crucial SKU data, need constant updates and connections due to various reasons - be it company mergers, expansions, or just routine updates.

The ripple effect of these data issues can be massive. Imagine running out of a crucial part during production because your data said you had enough.

Or worse, finding that you've overstocked on items, leading to wastage.

Poor data management often results in material wastage, inconsistent buying habits, and an ongoing cycle of costly write-offs.

But what if there's a way to flip this?

Enter the world of intelligent supply optimization platforms. These are like your GPS in the world of procurement, guiding you to make strategic decisions based on a reliable and single source of truth about your materials and spare parts data.

By ditching data deficiencies and shifting the focus to effective materials management, managers can ensure they have the right materials, at the right time.

This not only speeds up efficiency but also helps keep costs in check.

Building Stronger Supplier Relationships

While technology is a big part of the picture, it's not the only factor in successful digital procurement.

A recent study by State of Flux found that building better relationships with suppliers is one of the best ways to prevent supply chain disruption in 2023.

So how can digital technology help with this?

One way is through improved communication. Digital platforms can make it easier to share information and collaborate with suppliers, helping to build stronger, more trusting relationships.

They can also provide real-time data, making it easier to manage supply and demand and respond quickly to any issues.

Another way is through more transparent and fair procurement processes.

Digital tools can help ensure that all suppliers are treated fairly and that procurement decisions are based on clear, objective criteria.

This can help to build trust and loyalty with suppliers, which can be invaluable in times of disruption.

According to a study by Harvard Business Review Analytics Services, 60% of business leaders reported that they were fast-tracking plans to digitize supplier management.

Improve Compliance

When we strategize smart digital procurement solutions, compliance stands as a critical pillar. It's more than ticking off boxes; it's the foundation of a solid procurement structure.

Compliance in procurement goes beyond rule adherence. It fosters trust, efficiency, and strengthens supplier relationships while boosting operational efficiency.

A transparent procurement process underpinned by compliance enhances the organization's reputation and provides a basis for long-term supplier relationships.

Boosting Compliance: The first step to enhance compliance is to collaborate only with qualified and responsible suppliers. Working with suppliers who understand and adhere to your organization's rules and quality standards is paramount.

But that's not all…

We also need to make the procurement process as simple and seamless as possible. This encourages adherence and makes it more likely that everyone within the organization will follow the established procurement protocols.

Risk Mitigation: Reducing risk is another important aspect of smart procurement strategies. This involves two primary areas: the risk of non-compliance and cost and reputational risks due to poor quality.

Non-compliance risks can be minimized through robust processes and the use of digital tools that provide alerts and reminders about compliance requirements.

As for quality-related risks, these can be mitigated by choosing suppliers who adhere to high-quality standards and performing regular quality checks.

This not only protects your organization's reputation but also leads to cost savings in the long run.

Spend Optimization: Achieving spend optimization is the ultimate goal of any procurement strategy. With smart procurement solutions, organizations can aim for a spend optimization of around 0.5% to 3%.

This means ensuring that every dollar spent brings the maximum possible value to the organization.

Digital procurement tools can help identify areas of overspending, uncover cost-saving opportunities, and ultimately make the entire procurement process more efficient and cost-effective.

Aligning Procurement and Operations

In strategizing procurement solutions, harmonizing your procurement and operations teams is essential. This synergy saves costs and streamlines your processes.

Resilient System: Your strategy should incorporate variables that might affect demand, such as keeping the right spare parts for ongoing production and anticipating demand variations due to new products, promotions, or seasons.

Unified Approach: You must ensure both procurement and operations teams are working off the same data to avoid duplicated efforts.

Such alignment prevents any potential hiccups in your procurement and operations strategy.

Conclusion

As we look ahead to 2023, it's clear that the world of procurement is changing rapidly. Digital technology is playing a key role in this transformation, helping to drive efficiency and insight through digital procurement spend analysis.

But it's not just about the technology. Building stronger relationships with suppliers is also crucial, and digital tools can help to facilitate this.

By combining these two elements, procurement teams can navigate the challenges ahead and drive forward the digital transformation of the supply chain.

Interested in redefining your procurement strategies for a digitized future?

Contact UniAspect Digital today to discover how our smart digital procurement solutions can transform your supply chain and help you navigate the ever-evolving business landscape.