There has been a lot of talk recently about digital procurement — using technology to manage the procurement process. In fact, the Hackett Group, an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices digital transformation firm, found that 84% of a group it surveyed believe that the digitalization of the procurement process is the next step for their businesses.
Omar Abdullah, co-founder and managing director of The Smart Cube, published an article in Supply & Demand Chain Executive about digital procurement and how it can literally transform a business. But first, he cautions you need to assess your readiness to move in that direction.
He identified five areas of consideration to determine if your organization is digital ready.
- Access to data: While having enough data is important, you need to make sure you have the right data, that it is organized and that you can access it easily.
- Technological readiness: Change is hard, so you need to ensure that your organization is open to the idea of adopting new technology and new ways of doing business. Remember, technology comes with a price tag so make sure you have budgeted for it including the cost of training your employees on the correct way to use the new technology.
- Access to analytical skills: Look at your current staff. Do they have the aptitude and skills needed to use the new technology? If not, can they be taught those skills or will you have to go outside the organization to find people who have the necessary skill set?
- Develop the right policies and practices: Define roles and responsibilities for everyone involved in the transformation and for those who will be using the technology. This is also a good time to review your procurement process to see if there are areas that you want to change to get even more value out of the technology.
- Senior level support: Like most changes in an organization, buy-in from senior-level executives is going to be essential if you are going to move your procurement process to a digital platform. Top-down vision and support can make or break the transition.
Abdullah then offers some practical tips for taking advantage of digital procurement.
- Develop a value-based procurement strategy: Review your existing procurement strategy to make sure it is focused on delivering value to your customers and to your organization. Ask yourself how digitizing the process will make it easier to meet customer needs, be more efficient, or reduce costs.
- Perform a digital assessment: In this part of the process, you need to ask yourself some key questions including those surrounding your objectives for the project and what the impacts of digitalization are likely to be as well as what areas of your operation will be impacted the most.
- Identify tools and technology: Choose the tools and technology that will allow you to achieve your objectives, but make sure they are the ones that are easy to implement and user-friendly.
- Phase in the implementation: As with most major changes, you need to develop a plan for the step-by-step implementation as well as define key performance indicators you can use to benchmark success.
Digitalization is occurring across all areas of business operations, and if you have not done so already, you need to begin exploring how you can move toward digital procurement in your operation.