Procurement departments are an unlikely place to start a business revolution. Ask anyone outside the procurement department about what they do and generally the response is “They make it hard for us to buy things”.
Historically, this has not been far from the truth – the typical procurement team was charged with the not so easy task of phoning suppliers demanding they ‘make it cheaper’, and then adding layers of paperwork in place to make sure every purchase went through a rigorous audit trail.
But times are changing, and the sleeping giant known as procurement is awakening from its slumber and moving into a more leading position within the organisation, thanks to the help of digitisation.
In the last decade a dramatic change has taken place with a number of companies now introducing digital tools to make procurement a central driver, not only to cut costs and simplify operations, but in some cases discover new streams of revenue.
There is mounting evidence that automation through e-procurement enables companies to achieve a reduction in cost of 8-12% (on average) – which year on year adds to a significant amount. But this may just be the tip of the iceberg when it comes to the potential benefits a digital procurement solution can bring.The procurement function has shifted from a ‘buying goods and services’ to one that is ‘driving value’ where every dollar spent is now measured on its overall value contribution. From being able to find new suppliers, managing contracts and generating expense insights – it is now much easier to make better business decisions.
McKinsey has identified the digital applications that will make a real difference to a company’s procurement performance. They fall into two broad areas:
- tools that identify and create value
- tools that prevent value leakage
How digital will transform the procurement value chain: A landscape of use cases along two major areas
Companies such as think Procurement – an Australian business whose mantra ‘Buying Better Profits’ are one such provider who have looked at the traditional procurement processes and developed an automated Procure to Pay (P2P) solution. With pe-negotiated product catalogues, automated workflows and payment gateways readily available – thus resolving the typical headaches involved in the procurement profession.
Think’s digital procurement solution focuses on the automation of transactions, while providing advanced spend insights to previously unavailable information and giving order to huge unstructured sets of data. The P2P solution covers the full scope of the end-to-end process. From accessing pre-negotiated content, requesting, receipting, payments, and extending from requisition management to adjacent areas, like expense management. Think’s technology is driving more advanced analysis, smarter purchasing strategies, and thus more efficient operations.
There has been a clear shift in procurement from simply buying goods to a powerful driver of value. Digital procurement solutions such as think Procurement’s are now one of the biggest levers to optimise organisational cost. Technologies can now be deployed faster than ever – its time organisations realise the full potential of these digital procurement tools.
For more information about how think’s procurement platform can help your procurement team lead the digital revolution – get in touch here.