By Gaurav Baheti, Founder & CEO, Procol
In a world where procurement drives transformation projects of most companies, simplifying and optimising the procurement process is of utmost importance. Optimisation of the procurement process begins with digitisation. This involves incorporating gen AI and automation.
Advancement in digital technology is not only transforming the world of procurement but also enhancing the way procurement brings value to a business. With the availability of a myriad procurement platforms in the market, digital procurement is the cynosure in the realm of supply chain management.
Digital procurement is the process of applying technology to make strategic sourcing predictive. This helps in driving supplier relations efficiently. Most importantly, it helps in automating the procurement process. Digital procurement enables businesses to save costs and maximise profits. It also brings into the picture insights and data that is integral to drive major business decisions. For instance, the reports you receive give you information about the times of the month when your inventory is light in stock and need to be refilled. A closer analysis of this trend will help you identify two to three times every month when you can schedule re-sticking of your inventory and avoid shortage of materials.
At a stage where we are touching the pinnacle of digitisation in procurement, businesses looking to adopt digital methods in their procurement practices are in for a treat. This is because most procurement platforms involve minimal installation cost and seamless integration. This is how most procurement platforms drive digital procurement to ensure smooth supply chain management is now an attainable goal.
With time, businesses have started witnessing the amazing effects of digital procurement in every step of the process. Professionals in the sourcing space have always faced challenges in sourcing the right suppliers, getting the optimum quality of goods at the most reasonable and justified prices. Procurement platforms also aid in categorising the different vendors on different parameters. This brings a sense of efficiency to the process and near about eliminates errors.
One of the most profound benefits, however, has been the usage of artificial intelligence. AI enables demand prediction which ensures smooth inventory management, making it indispensable in the entire supply chain process.
If statistics are to be believed, then almost 96% of businesses today are leveraging AI in their procurement processes. This only goes to say that digital procurement, especially AI is the king of the future.
Yet another innovation brought about by most procurement companies in digital procurement is supplier negotiations and contract development. Previously susceptible to biases and errors, this process is now completely fool proof. With automation, there are clear parameters for comparison of supplier quotations and promised quality. This means, vendor finalisation can be done with objectivity, thereby choosing the right vendor for material requirements.
Another miraculous and almost unimaginable innovation has been the mechanism of real-time notifications in the delivery process of materials. This helps in initiating speedy payments following receipt of goods. This, in turn, helps in enhancing supplier relations which can help a business reap long term benefits.
Within procurement, finance is a whole other department which has been a problematic division for many business owners. Digital procurement also makes finance processes more streamlined and punctual. From easy vendor onboarding to safe and secure payments, the procurement platforms take care of it all. Consider the example of three-way matching here which digital procurement enables for you. Digital platforms enable automated matching of purchase order, invoice and receipt report so you there is no error in verifying the order with the delivered goods. Globally, over 80% businesses have either already onboarded an automation platform of some sort or are in the process choosing one.
Most businesses implement certain core procurement technologies that are integral to digitisation. These core technologies include eSourcing, Contract management and eProcurement, among others. These are solutions that are here to stay as they help businesses accomplish and achieve their procurement needs.
While predictive analysis is an important digital solution in procurement, there are other solutions that have become significant too in the recent times. These are robotics, block chain and Crowdsourcing. Robotics has had a major impact on automating manual and repetitive tasks, thus eliminating human intervention. Additionally, crowdsourcing helps organisations rely on crowd to innovate new products, Crowdsourcing also enables businesses to get suggestions from industry experts to enhance the standards of their procured goods. With digital procurement, a business can have all of this at their disposal.
In conclusion, digital procurement brings strategy to every part of the procurement process. It helps in driving business growth with:
- Detailed insights which lead to more informed decision-making and leadership
- Superior risk mitigation and guarantee of consistent supply
- Better collaboration and smoother operation
- Organisational efficiency brought by meticulous processes
Hence, digital procurement has truly transformed the world of supply chain. Yes, there is certainly a sense of confusion among business owner with so many options available. But this is an expected outcome of most innovations. Hence, what is important is that we embrace this state of perplexity and come out of it with more knowledge and better decisions so our businesses can benefit the most out of it.