Procurement Digitalization
Why is Procurement Digitalization Important?
Digitalization creates two new opportunities for any procurement function. First to step-up and support the corporate digitalization roadmap and taking clear ownership of supplier relation that support this transformation. Secondly it creates opportunity for the Procurement function to drive procurement digitalization that can be used as an enabler, to identify and create value, and to prevent value leakage. A Procurement Done Right function needs to embrace these two opportunities.
In addition, there has been countless of discussions about; why is it so complex and time consuming to buy corporate stuff when it is so easy to buy something online as a private person. For the last 20-years this has been true, but now times are changing fast. Now Procurement faces a wake-up call that can change the function totally, moving lightning fast towards full automation.
How to Digitalize Procurement?
As Procurement moves from user-unfriendly suites to user centric best-of-breed applications, from bespoke processes to standard workflows, and from on-prem to SaaS solutions, we see a tectonic shift ongoing for the procurement function. An explosion of procurement technology start-ups has emerged with unique offerings and user-friendly solutions. Offering a wide range of micro-services that can be integrated to change the procurement function forever.
At, PIR we typically drive procurement digitalization initiatives in three phases: Pre-study, Sourcing of solution, and Detailed design & implementation. We believe that a thoroughly conducted digitalization project ensures focus is spent on the right topics to maximizes long-term value.
Pre-study
Focus on establishing common view on the organization’s current state, its prerequisites, and long-term objectives. In PIR’s process, this typically conducted through analysis of e.g., IT spend, mapping of IT systems, review of internal processes, identification of key use-cases, and market analysis of relevant system suppliers to act as basis for a business case and roadmap for implementation.
Sourcing of solutions
Based on pre-study results, initiation of dedicated effort to acquire fit-for-purpose and solution through a strategic sourcing initiative to ensure long-term objective fulfilment. Read more about PIR’s Strategic Process here.
Detailed design & implementation
Once a solution has been successfully selected or sourced, a detailed design and implementation plan is set. Here we define and validate the future state in detail and plan/carry-out iterative build and test sprints based on agreed design. A professionally conducted implementation project continuously also integrates change management and training throughout the Detailed Design & Implementation phase to ensure organization is ready to adopt new systems and process on go-live.
What Are Key Considerations When Digitalizing Procurement?
Achieving successful procurement digitalization requires a strategic approach and by focusing on key success factors, organizations can ensure a smooth digital transformation. Five key success factors for procurement digitalization are:
Define targets state and digitalization ambition. Define analytics target state and requirements on data capture in processes. This will influence the granularity of the configuration, e.g., Category specific RFx templates or basic set-up, fully digital contracts or repository.
Secure sourcing leadership and appoint C-level ambassador to create a case for change to enable high adoption rates within the organization of the implemented solution. Plan for Change Management in all phases of the project.
Engage and secure training for end-users to create an understanding of ways of working and their benefits. Establish a core team to drive process and content development.
Prioritize supplier and contract master data, especially in multi-ERP environments. Define master data process and integrations. Plan for cleansing and quality improvement initiatives before data migration and deployment.
Aim to create a user-friendly solution for end-users and suppliers. Complex and time-consuming supplier qualifications leads to lack of interests from the supplier base. Do not overengineer solutions to cover all exceptions and avoid multiple approvals.
What Value Does Digitalization Bring to Procurement?
A well-implemented digital platform can significantly increase procurement maturity, aligning with strategic goals and enhancing capabilities in transparency, quality control, and sustainability. Our approach ensures that procurement processes are efficient and not over-engineered, leveraging best-of-breed tools and integrating with third-party applications. Establishing a core solution with standardized processes that can be rolled out with minor local adjustments is crucial for success
