Defining digitization for procurement 

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Genpact and Procurement Leaders recently hosted an exclusive roundtable for executives in New York. Focused on the role of digital, the group agreed that digitizing procurement requires more than just technology. Read the Procurement Leaders write up for some key insights from the session.

Regardless of the industry or geography in which a company operates, digitization is high on procurement executives’ agendas. Attendees at a Procurement Leaders roundtable discussion in New York, partnered by Genpact, were concerned with how the function could best capitalize on this revolution and harness digital innovation without breaking the bank. First, though, the participants agreed it was necessary to define ‘digitization’. 

“We all interact with digital every day, whether that’s in our business or personal life,” said one key figure at a digital marketing firm. “For a lot of people, digital is synonymous with technology. But, actually, technology, is just a part of it – it’s certainly not the panacea,” said Jon Kirby, SVP of Source to Pay at Genpact. 

Instead, attendees concurred that digitization was far more complex and involved the integration of processes, analytics and technology to drive meaningful business outcomes. Not simply taking out cost, for example, but also using digital as an enabler for growth, said Kirby. With that in mind, it was deemed essential for any digitization strategy to align closely with the business’s overall objectives.

The implications of digital are manifold, with one participant outlining the benefits it offered in areas such as supply chain visibility and another detailing the impact it had on data management and supplier engagement. Attendees also agreed that simply searching for technology to automate processes without considering the full implications was not the best way to tackle any digitization drive.

“There’s lots you can do but you need to be clear on the outcomes,” said Kirby.

How procurement can make a strategic impact:

  1. EPS and EBITDA growth: Drive revenue growth by improving time-to-market, accessing supplier-enabled innovation, improving price-point elasticity, and developing new products 
  2. Risk mitigation: Segment suppliers against a risk framework that includes financial risk, supply assurance and reputation 
  3. Working capital optimization: Dynamic discounting can provide data and insights into asset utilization and lease versus buy strategies 
  4. Innovation: Collaborate across the supply base to access new ideas 
  5. User experience: Ensure stakeholders have a good experience when ordering products and services 
  6. Operational efficiency: Standardize and automate processes to improve productivity and efficiency

A digital strategy

Attendees said implementation requires a balance between wanting to innovate and ensuring everything is in place to drive success. 

One participant said their company was aware of the need to embrace innovation and digital offerings. Although that was a priority, the company accepted there were issues to be fixed first. It was acknowledged that the business was failing to pay its vendors on time, mainly as a result of manual processes. Where technology was in place, lots of systems operated in isolation across a range of geographies. The company devised a single ambition – paying vendors on time and introducing technology to enable that. It was a good example of how digitization could improve the company’s standing with its supplier and free up people to focus on value-adding areas.

Kirby mentioned the need for organizations to adopt a different approach, according to where digitization is required, whether that was in the front office – where it has had the biggest impact to date – or the middle and the back offices, two areas where digitization is in its infancy. “It’s essential that, whatever you do, you keep it user focused,” said one attendee. “You can fix the back-office function and as you’re doing that you’re freeing up time, money and resource to do a more effective job in the middle office.”

Read the full write up on the Procurement Leaders website to see the group’s discussion on how to encourage adoption and the future of AI in procurement.