We are all exposed to and aware of the continuing digital transformation of society and business. Low-cost computing, secure and economic data storage and retrieval, sophisticated sensors and intuitive interface software systems are fundamentally altering how we create, design, produce, distribute, sell and service products. The explosion in mobile technology use, brought about by these same factors, has also meant a progression to “continual connectivity” between consumers, producers and marketers.

As a purchasing professional, this pressure to implement technology has also meant rapid change, increasing innovation, and meaningful opportunity to produce and add to corporate value. Depending on your level of acceptance, however, it can also mean being forced to function in a highly competitive environment brought about by the technology itself.

According to a recent survey of purchasing executives at large companies by The Hackett Group, only about 32% of procurement departments have implemented a digital strategy, but nearly 85% believe that digital adoption will fundamentally change the way they manage and deliver services over the next 5 years. If you’re not moving faster, fast, then you’re at risk of falling behind.

Depending on the size of your company and department, you may be using some of this technology right now. How you adapt, plan to embrace more digital solutions, and implement them intelligently can mean important things to the future of your enterprise.

Here is our attempt to make sense of digital technology systems used in purchasing, by bulleting what they offer now, where they are heading, and how to make use of them in the near future to benefit your organization.

WHAT DIGITAL PROCUREMENT OFFERS NOW

• Simple systems:
  • E-sourcing & invoicing
  • AP Automation
  • Some inventory control (not real time)
  • Supply source organization
  • Opportunity reminders (quantity & payment discounts)

• Advanced systems:
  • Real-time inventory control
  • Automatic ordering & stocking
  • Spending analytics
  • Contract management
  • Embedded approved parts catalogs
  • Timely alert action based on negotiated opportunities (volume pricing, penalty avoidance, etc.)
  • Relatively quick deployment and ease of integration

BENEFITS OF A DIGITAL APPROACH TO PROCUREMENT

• Improved speed of procurement
• Improved product quality
• Prevention of maverick sourcing
• Demand control
• Better risk management
• Enforced compliance
• More time for strategic focus
• Enhanced innovation

WHAT IS IN THE FUTURE

• Parts sourcing driven by connected manufacturing
• Predictive demand driven by artificial intelligence
• Automatic ordering based on predicted demand
• Automated secure payments
• Monitoring of supplier risk based on outside data feeds
• Analyzing and using big data to predict outcomes
• Real-time collaboration with suppliers
• Blockchain technology-enabled exchanges
• Virtual reality supplier visits & audits
• Increased use of sensors to record physical data

Soon to be gone are the days of your engineering department bypassing purchasing and selecting components on their own for future systems without regard to pricing, quality or volume availability. By embracing the existing menu of digital procurement system assets, and exploring those in the near future, you can gain control, save time, reduce costs, and improve your products.

The bottom line: If you’re small, you need to learn quickly and use what you can. If you’re medium-sized, keep looking and building because your competitors are doing the same. If you’re big, expect continuous change and an expanded focus from upper management on sophisticated solutions to improve ROI.