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January 22, 2024
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Improving ROI with procurement digital transformation
Digitalisation is a reality that every business must face in this day and age. Transforming business processes to adapt to this reality is necessary not only because it helps businesses remain competitive but also because it is an investment that pays long–term dividends. Here is how businesses can improve ROI by transforming their procurement processes.
Procurement digital transformation refers to the process of digitalising business processes related to procurement with the aim of improving efficiency, identifying opportunities to create value, and driving growth.
As procurement departments across businesses and industries continue to face the volatile supply chain conditions brought about by the pandemic and geopolitical tensions, digital transformation is seen as an increasingly important initiative to employ.
In 2022, 86% of organisations reported using procure-to-pay (P2P) software according to PwC’s Digital Procurement Survey. The regard for digital technology usage in procurement is made clear from this statistic.
Here’s what digital procurement offers businesses operating in today’s economic conditions.
Benefits of procurement digital transformation
Transforming the procurement processes of a business offers opportunities for cost and efficiency optimisation, value creation, supplier relationship development, and more.
Digitalised procurement processes are highly efficient as they minimise the amount of manual work required, eliminate paperwork, and improve the productivity of workflows across the board. This not only enhances the efficiency of the procurement function but also offers a wide variety of opportunities for cost saving and optimisation.
One of the biggest upsides of digital processes, especially now, is the increased transparency that it brings. This allows procurement departments to clearly define roles and responsibilities within the organisation. It also allows the business to get a better understanding of the procurement process.
The digitalisation of the procurement process also paves the way for better relationships with suppliers. With digital systems for sourcing activities, suppliers can benefit from reduced transaction costs and the flexibility of web or application-based systems. Easing processes for suppliers fosters better relationships, resulting in a stronger supply chain.
Digitalised procurement processes are highly efficient as they minimise the amount of manual work required, eliminate paperwork, and improve the productivity of workflows across the board. This not only enhances the efficiency of the procurement function but also offers a wide variety of opportunities for cost saving and optimisation.
One of the biggest upsides of digital processes, especially now, is the increased transparency that it brings. This allows procurement departments to clearly define roles and responsibilities within the organisation. It also allows the business to get a better understanding of the procurement process.
The digitalisation of the procurement process also paves the way for better relationships with suppliers. With digital systems for sourcing activities, suppliers can benefit from reduced transaction costs and the flexibility of web or application-based systems. Easing processes for suppliers fosters better relationships, resulting in a stronger supply chain.
How to improve ROI through digital transformation of procurement
Improving ROI is a natural consideration in any business investment. Here is how businesses can improve ROI by transforming their procurement function.
Utilise data analytics for better decision-making
Digital transformation includes initiatives that promote a higher level of data analytics and business intelligence usage within the procurement process. Through data analytics and business intelligence, businesses can gain valuable insights related to the procurement process which can then be used to inform the decision-making process, supporting the overall strategic goals of the business
Streamline workflows in the procurement process
Digitalisation can increase the productivity and efficiency of the procurement process dramatically. This is achieved by reducing manual work through automation, minimisation of errors, and the procurement team being made free to focus on more value-added, strategic tasks. This improves ROI by streamlining workflows and allowing optimal resource allocation for categorically important tasks.
Optimise procurement budgets through increased visibility
Digitalised procurement processes provide a higher level of visibility into both internal operations and external supply chain activities. This creates unique perspectives for procurement teams which can then be used to identify potential cost-saving opportunities. These opportunities can then further be exploited to optimise procurement budgets, directly contributing to improved overall ROI.
Mitigate risks in the supply chain and ensure continuity
The risk landscape for procurement is vast, especially with the added complications presented by global supply chain disruptions in recent times. Procurement digital transformation also encourages a more comprehensive approach to risk management with the use of technology to identify, assess, and manage risks across the supply chain. This helps businesses ensure continuity in procurement.
Witness exponential growth in ROI with Kronos Group’s digital transformation offerings
As an experienced procurement consultancy with over a decade of experience, we understand the value of adapting to changing market conditions. That is why Kronos Group has taken steps to improve our procurement digital transformation capabilities.
We have partnered with global procurement software providers like Ivalua, GEP, and Oxalys to supplement the process of digitalising the procurement function.
Kronos Group’s procurement consultancy services include:
- Procurement maturity assessment
- Procurement excellence
- Procurement training
- Procurement outsourcing services
Coupled with the expertise our partners bring to the table, your digital transformation journey for procurement will be highly effective and efficient with Kronos Group.
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FAQ
What do you need to know?
The 4 main areas of digital transformation are:
- Process transformation
- Business model transformation
- Domain transformation
- Cultural transformation
Digital transformation has the potential to significantly improve the procurement function by offering opportunities for cost and efficiency optimisation, value creation, supplier relationship development, and more.
The benefits of digital procurement include improving the efficiency and effectiveness of workflows, providing organisation-wide process transparency, and enhancing supplier relationship management.
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