Why should digital transformation in procurement be at the top of the priority list?
According to a McKinsey survey, CPOs expect digital procurement to increase annual savings by 40%, reduce transactional sourcing time by 30% and reduce value leaks by as much as 50%.
Automating your purchasing experience not only saves money and time, but it creates a greater opportunity for strategic projects and talent development. At Proactis, we’ve seen these savings with our customers too, and they break down even further. Procurement transformation is a win-win for everyone in the organization.
Here are the top 5 business drivers on why digital transformation in procurement needs to happen before anything else.
- Increase profit margin – One shared concern between Finance and Procurement is cost management. Through close collaboration and automation, procurement and finance can build cost models to help turn its P2P process into a profit center. With improved visibility of spend across your organization, finance and procurement can identify areas for consolidation, cost reduction, and early payment discounts—just to name a few.
- Gain visibility – Visibility among the entire Source-to-Pay process is invaluable. Say goodbye to maintaining spreadsheets, paper invoices, lengthy purchase approvals and bring it all together in one platform to create a holistic view of who, what, where, when, and how. Combining your P2P with S2C (contract management and supplier portal) will facilitate a 360-degree view of the entire buying process and help optimize control, compliance, and efficiency.
- Enhance internal controls and processes – this is where the journey of procurement really begins. If one of your main responsibilities in the organization is to create new or improved business processes or determine process efficiencies, then looking at the procurement process (whether you have one or not) is needed as it affects everyone in the organization. If your processes are manual or getting hit by a large bill to customize your current system, then there is a significant amount of efficiencies to gain. Putting procurement policies and internal controls in place will not only help with unwieldly spend but you’ll start to see where you might be experiencing cash leakage.
- Become more efficient with your resources – When employees are faced with repetitive tasks, such as, data entry, working in spreadsheets, or managing an uncontrollable amount of paperwork, you aren’t utilizing them to the best of their ability. And today, more than ever, Finance and Procurement teams are evolving from a tactical to strategic function of the business. The more you rely on your employees for data entry, the more outdated your culture becomes and stagnant your team gets—leaving your team feel under-valued. But you can flip the script and empower your team with digital transformation. Take away their mundane tasks and let them analyze and report on critical data for decision making.
- Provide a streamlined buying experience for everyone in the organization – Ecommerce has changed the way we shop online. So, when you replicate the consumer buying experience for your employees, you’re providing them with an easy way to purchase — something we have all become accustomed to. The challenges that the procurement team once had such as employees bypassing the process or not adhering to the policies are finally being met because of the system’s ease of use and fast turnaround times on approvals thus improving employee engagement and empowering them to work smarter and more strategically.
Everyone wins with a procurement digital transformation. So if you’re about to put that project on hold or put other priorities ahead, think about the benefits across all areas of the business and what that transformation could lead to. When you have people, processes, and technology all aligned, it’s an efficiency gainer, culture enhancer, and bottom-line improver – a win-win-win.