What is Digital Procurement?
A quick guide to Digital Procurement
Digital Procurement should be your Priority
Procurement is the process by which an organisation acquires goods and services. That's a simple definition but a useful one. Digital Procurement is using digital technology to improve the efficiency and effectiveness of procurement processes, resulting in increased benefits to buyers and suppliers.
We hear the phrase "digital transformation" a lot in 2022
We hear the phrase "digital transformation" a lot in 2022, but not everyone knows.
Digital transformation is often used to describe a company's efforts to shift from a traditional paper-and-pen model to an electronic system that uses computers, networks and software for business operations. It can help a company save costs by eliminating waste and boosting the efficiency and speed of procurement activities.
According to a Gartner survey, "61% of respondents say technology is a source of competitive advantage". Competitive advantage is a status we should all strive to support in Procurement as we move from the cost-cutting fixation of the Procurement Dinosaurs to Value Adding Procurement Heros.Â
A digital transformation is any process that helps businesses become more agile and efficient.
A digital transformation is any process that helps businesses become more agile and efficient. It can include sales, marketing, customer service, HR and even Procurement. Procurement should not transform its Digital Procurement efforts in isolation. We need to consider the Procurement Stack and how this works with the entire Tech Stack of the business.
Digital transformation isn't just about technology; it's also about changing how you think and act as a business. It means moving from a traditional approach to one that embraces new technologies and ways of working.
A typical organisation will use technology to change their business and improve its core functions.
Businesses are looking at ways to use technology to improve their operations, which leads them into the World of Digital Procurement. Digital Procurement is part of this more extensive digital transformation process that is currently taking place in organisations across the globe. I no longer see a Procurement Profession. I see a Digital Procurement Profession, and we should all become competent.
This need for Digital Procurement Transformation has only been exacerbated by the impacts of Covid-19. The Best Procurement Professionals know they need to prioritise this transformation to unlock the value generation of Procurement.Â
Digital Procurement can be a game-changer for businesses in the modern era
This can include sales, marketing, customer service, HR and even Procurement.
The digital procurement function has a hand in most areas of an organisation. This is because it often bridges departments and business functions such as sales, marketing and customer service. Procurement is also a critical piece of the puzzle that touches many more departments than just those involved with purchasing goods or services.
Conventional Procurement typically focuses on cost reduction through price negotiations and sourcing products from the lowest-cost supplier. Digital Procurement aims to expand beyond this approach by focusing on innovative ways to source goods or services that provide value for your company and suppliers.
Digital Procurement involves using technology to improve how you manage your supply chain and related processes.
Digital Procurement is a way for businesses to take advantage of new digital tools to improve how they buy goods, services or materials from vendors/suppliers.Â
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Fortunately, over the last five years, there has been an explosion in the options available to us. When considering which Procurement Tech solution you want to bring into your business, it can be intimidating. That's why I implore you to significantly improve your knowledge of the Procurement Tech marketplace to understand what is available and what they can do. One suggestion would be to pick up Dr Elouise Epstein's book, Trade wars, pandemics and chaos which will give you a detailed crash course on Digital Procurement ((As an Amazon Associate I earn from qualifying purchases).
It's a good start on Digital Procurement. See, as I mentioned, there are a plethora of Procurement Tech Solutions out there, such as:
AI Sourcing with Globality
On-Demand Sourcing with Market Dojo
User Intake with Zip
Supplier Collaboration & Innovation with Vizibl
SaaS Buying Platform with Sastrify
Sourcing Orchestration with Arkestro
Vendor and Contract Lifecycle Management with Gatekeeper
Automated Small Supplier Buying with Paid
Automated Tailspend with Fairmarkit
And there are many more.
It's a way for businesses to take advantage of new digital tools to improve how they buy goods, services or materials from third-party vendors.
Digital Procurement is a way for businesses to take advantage of new digital tools to improve how they buy goods, services or materials from third-party vendors.
Digital Procurement can help your business by:
Improving the speed and accuracy of your buying process
Reducing spending on suppliers who charge higher prices than the market rate
Enabling you to spend less time managing the purchasing process, freeing up valuable resources that could be better spent elsewhere in your organisation
Speeding up the Contract Process
Ensuring you have a master record of data
Digital Procurement can be a Game-Changer
The benefits of digital Procurement are numerous, but in short, it can help you save time, money and reduce risk when buying goods and services for your business.
In addition to these tangible benefits, a digital procurement strategy can help you improve your relationships with vendors by increasing transparency in the supply chain.
Moving collaboration away from emails and Slack and creating a community of suppliers in your Digital Procurement Stack can enhance your ability to forge powerful relationships. As does time saved from working on arduous and mundane work. As soon as you free your Procurement Team up to work on the value-adding activities such as:
Supply Chain Risk Management
Supplier Relationship Management
Post-Signature Contract Management
ESG inclusive of Sustainability
Internal collaboration with your colleagues
Continuous Improvement on Processes and Governance
Sustainable Cost Reduction Programmes
You cannot tell me this is achievable when you're still tracking your suppliers in Excel. You're just lying to yourself if you think this is the case.
A Final Note on Digital Procurement
If you're looking to implement a digital procurement process, it's essential to understand what it involves. The first step is evaluating your current strategies and identifying where technology can help. Then you can start building your vision for a better future that aligns with the rest of your business and your Digital Transformation Vision.