What does the future of procurement look like? Let us look at how digital transformation and technology advancements are likely to shape the future of Procurement.
Procurement has started to get recognition as a strategic function that provides a competitive edge. With Procurement KPI and measurement metrics being implemented religiously, organizations have become conscious, that streamlined procurement processes can significantly improve their profitability. Organizations have therefore shifted their focus from manual sourcing and demand management to a more digital, automated and technology driven Procurement approach.
Future of Procurement
Digital technologies will enable automation of manual procurement processes. This will bring process automation and end to end transparency in the Procurement process. Procurement software will empower stakeholders with real-time information, intelligent reports, analytics, and real-time dashboards. Thus enabling making informed decisions in real time.
New and innovative technologies such as Artificial Intelligence, Machine Learning, Block Chain, Automation, Mobility, Cloud, Internet of Things, Robots, Chatbots, are on the verge of bringing about a fundamental change in procurement and sourcing process. Many organizations have started exploring the options of adopting these technologies in the Procurement process in a small way, to begin with.
With increased capability of analyzing a large set of data from diverse sources, demand forecasting will improve. Organizations will be able to predict their demand more accurately
Supply Chain Operations
Advancement of technology will improve collaboration among various stakeholder of supply chain and logistics. This will help to improve delivery performance, reduce cost freight cost and minimize supplier risk.
Business Transactions and Approvals
With open, verifiable and trustworthy record keeping methods, various stakeholders such as buyers, suppliers, banks, insurance companies will work on a common set of data. Data preparation, sharing, and approval of data by all stakeholders will happen on a real-time basis.
With process automation, the complete payment process will be automatic. Activities such as auto three-way matching of invoices or auto trigger for payments will become the norm. Seamless integration with different applications including banking applications will remove person dependency and make payment process efficient and quick
Improvement in visual pattern recognition software will open up many potential applications in the field of physical inspection of materials. They will also find application in the inspection of physical assets for maintenance. Technology has the potential to completely replace such manual & repetitive inspection tasks.
Buyers and supplier will work together in more collaboration and with more joint responsibility. Organizations would be able to measure supplier performance more clearly. Similarly, with increased collaboration & visibility, organizations will be able to identify, monitor supplier risk more efficiently.
Smart algorithms and bots will be able to identify high volume of repetitive and rule-based tasks. Such procurement processes will be automated. The procurement team will be able to work more on business-critical parts rather than doing repetitive manual paperwork. This will help reduce error and risk in procurement and will also improve the efficiency of procurement.
Combined applications of various technologies such as machine learning, artificial intelligence, data from various sources and statistics will predict most likely scenarios and improve decision making. Contextual intelligence will help to improve supply chain performance with better production planning, reduced inventory levels, lower inventory cost, and improved delivery performance.
As we transition towards a fast-paced, technologically advanced and more connected world, these new and upcoming technologies will play a significantly influence the future of Procurement. Procurement Leaders should prepare themselves and their teams to adopt changes to become future ready. They can think of long term procurement strategy considering these technologies and start taking small steps towards them.