Procurement 4.0.

October 30, 2019 / In today’s complex world, achieving savings is not enough. A digital transformation journey is needed to transform procurement teams from corporate functions into customer-centric service entities that leverage digital solutions to deliver value propositions to their customers.

In December 2018, the Global Uncertainty Index, a measure of unpredictability in 20 countries, reached a record level of 300. Tensions between the US and China, Brexit, economic slowdown in Europe – it comes as no surprise that we live in a VUCA world (volatile, unpredictable, complex and ambiguous). However, what does this mean for procurement?


In this context, companies have to use every tool at their disposal to succeed. That includes procurement functions, who now need new ways to overcome rapidly changing business challenges and to take advantage of all opportunities in increasingly dynamic markets. We believe that digital transformation is key to ensuring efficiency and effectiveness in this context. While external market information is becoming ubiquitous, internal knowledge also needs to spread faster across entire organizations. Technology can help to engage internal and external customers through interactive cloud-based tools, apps and portals for better and faster insights – to everyone’s benefit.


What added value?

Today, procurement is at an inflection point. It is time to change the focus in its KPIs and how its performance is evaluated. Savings used to be the core indicator for assessing procurement’s added value within a company. But stakeholders in many cases have wider needs than pure savings from suppliers: Contributing to topline growth, securing the supply chain stability or forging wider partnership deals have to be taken into account. It is becoming time to go beyond strict monetary values and include a far stronger focus on customer satisfaction. This underscores the consistent focus on customer benefit and ensures the prioritization of purchasing activities according primarily to stakeholders and their needs.


Ensure satisfaction digitally

In its research, the Hackett group identified a number of digital accelerators, such as digital engagement and analytics-driven insights. These accelerators are designed to enable procurement organizations to reach a new level of performance and efficiency, claiming they reduce process costs by 30 percent.


In line with these findings, we launched at BuyIn new digital services in the form of mobile and Web apps for our customers. Based on a solid data ecosystem, these apps efficiently collect, process and share the latest internal and external information, such as market prices, supplier financials, spend, closed contracts, demands etc.


They are designed to meet our stakeholders’ needs and seek to provide efficient support for finding the best sourcing option for each market and demand. To achieve this, we leverage state-of-the-art concepts such as machine learning, automated analysis and prediction algorithms. Our goal is to deliver the best-possible user experience to make it attractive for our stakeholders to directly look for the available information, giving us then the ability to focus our sourcing capacity to non-recurring tasks.


So what about the future?
Of course, procurement will always have to save money. Digital tools can help us take the next step and artificial intelligence will be the foundation to automating high complexity data to drive solid fact-based negotiations. To this end, procurement organizations will need digital tools that provide fast, easy access. That is where we are moving. One app at a time.


Author: Stefan Figge, VP Digital Office