Making procurement smarter through digitalization and new technologies
In today’s fast-paced digital age, technology has ever-increasing importance for businesses and their corresponding activities. This development has led to critical digital-centric challenges in the procurement function, such as efficiency improvement through the application of advanced analytics, or value generation through the use of big data. In particular, the application of assistive technologies such as end-to-end automation of the purchase-to-pay process, and organizational implementation of the future robotic workforce, have developed into crucial competitive factors.
To better understand how these trends are transforming the nature of procurement, Arthur D. Little brought together Austrian CPOs of key industry players at its Procurement 4.0 Roundtable in Vienna to discuss the impact of digitalization.
The future of procurement
The future of procurement will be characterized by the transformation induced by megatrends such as an immense level of digitalization, further increasing of globalization, the sharing economy and a shift in demographics.
Procurement will have to adapt to these new paradigm shifts and the related industry changes. Depending on the industry, these changes can range from volatile markets and pressures to cost reduction to a fundamental need for organizational and technical simplification. In an introductory keynote, Arthur D. Little outlined major trends to be considered, the challenges they implied, and areas of innovation which were most important for the field of procurement.
The clear vision is that the impact of digitalization on the procurement function will affect all core activities within an environment, in that business models will be eagerly pursued in order to evolve and survive in the competitive environment. In this context, future purchasing is not just expected to develop digital capabilities, but also be a driver of innovation when it comes to enabling the digital transformation of a corporation, whether the role is to in-source innovation from the market or be a collaborative, end-to-end business partner with automated or robotized processes.
Procurement in the 21st century focuses on adding value instead of simply cutting costs
Raiffeisen Bank International’s (RBI) service industry is undergoing deep changes, especially through digitalization, recent political and social developments, and the regulatory wave that recently hit the financial industry. Slow growth and low margins have also had a considerable impact on the banking industry’s overall business. The need to respond to these pressures has naturally affected the traditional banking approach on all ends. To adapt to these new circumstances, RBI has opted to keep its procurement framework and infuse its existing components with selected key technologies in order to optimize the business support of the procurement function.
Standard internal processes have been highly automated, while facilitating all ordering processes and providing internal customers with digital consumer-like experiences. End users are able to engage in low-value sourcing activities within a safe and compliant framework throughout organization. To achieve the desired levels of automation, areas that did not face end users needed modifications as well. For that purpose, RBI also went digital with its contract management and source-to-contract procedure.
Through the digitalization efforts in its procurement activities, RBI continues to focus on adding value instead of simply reducing costs. Procurement has implemented technologies to engage with both its suppliers and end users digitally, thus radically reducing time to source and promote fairness and transparency in a digital procurement world.