Digital Procurement

Digital Procurement System

  • Christina Yardley
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Digital Procurement 101 – From Trend to Reality

For years companies have reported their belief that having a digital strategy is important, but very few of them actually had one, and those that did, hadn’t made much progress in implementing it.  But within procurement departments, industry insight tells us this is starting to change…

Procurement systems are increasingly based on modern digital technologies.  A good digital procurement system will use artificial intelligence (AI) to complete business-as-usual procurement tasks with significantly reduced levels of human intervention.  For example, to automate key administrative processes.

Purchase requisitions are reviewed by ‘bots’, using algorithms based on catalogues, preferred suppliers and historic transactions, to approve and progress those which comply with ‘the rules’, only escalating those that don’t for review by the procurement team.  And when they do refer a complex query, it comes with accompanying analysis that makes the review simpler.

The simplest tasks can be made quicker and easier – from automatic updating of inventory lists and negotiating with suppliers for low-value items, to managing documentation electronically and the first-point-of-contact resolution of straight-forward queries via chatbots.

A good procurement system can generate massive cost savings and free the buying team to concentrate on higher value-add, complex tasks.  And although AI is typically applied to transactional processes, this can also extend to more strategic tasks, such as vendor selection and management.

And when they do refer a complex query, it comes with accompanying analysis that makes the review simpler.

Easy access to data, automated analytics and reporting, and the creation of digital dashboards all provide organisations with greater insight into their supply chain. That insight can help improve spend management and promote more strategic vendor negotiations, as well as manage risk – for example, detecting potential fraud.

A note of caution, however; with increased levels of data and online transactions comes the need for really robust data security.  Cyber attacks are ever increasing, and as that threat becomes more prevalent, procurement professionals need to take steps to protect sensitive personal and financial information relating to both to their own organisation and to their suppliers.

Where does your organisation stack up?

If you still have a diary full of face to face meetings, spend your time working with Excel spreadsheets, and analysis and reporting in preparation for a supplier meeting is a week’s work, maybe it’s time you persuaded your boss to consider the merits if implementing a decent procurement system.

Digital Technology Lingo

Navigate the techno babble with our glossary of terms:

  • Artificial intelligence (AI): the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
  • Robotic process automation (RPA): an application of technology, governed by business logic and structured inputs, aimed at automating business processes.
  • Big Data: extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions.
  • Machine Learning: an application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed.
  • Natural Language Processing (NLP): a branch of artificial intelligence that helps computers understand, interpret and manipulate human language.
  • Cryptocurrency: a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
  • Blockchain: a system in which the record of transactions made across platforms and hardware all over the world, enables secure data sharing between independent parties.  Often used with bitcoin or other cryptocurrencies and maintained across several computers linked in a peer-to-peer network.
  • Cloud: a network of remote servers hosted on the Internet and used to store, manage, and process data in place of local servers or personal computers.

We provide a Digital Procurement Service

Author: Christina Yardley
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