What is Digital Procurement? Definition and Benefits
What Is Digital Procurement?
Digital procurement is the use of technology to improve and automate the procurement process, replacing traditional methods to simplify supplier engagement, automate purchasing workflows, and provide insights to organizational spending.
Digital procurement can be achieved using enterprise-level solutions like Intellichief, which consolidates several core business technologies to provide real-time insights, superior process control, and streamlined decision-making throughout the procurement process.
The Basics of Digital Procurement
It’s no secret that error-prone business processes can derail procurement and cause friction between your organization and the suppliers it depends on. With the traditional method, there’s a lot of manual work involved such as paper-based purchase orders, emails to suppliers, and spreadsheets to track spending. These tasks can be repetitive, time-consuming, and error-prone which can be detrimental to efficiency, and burden your organization with unnecessary costs.
Digital procurement is designed to mitigate these challenges by streamlining the procurement process and insulating it against human error. By equipping procurement professionals in your organization with the tools they need to improve daily operations and perform their jobs at the highest level, you can reinvent the way you approach interactions with suppliers and third parties by supporting an integrated platform that brings all stakeholders to the table for direct collaboration.
The Benefits of Digital Procurement
When considering whether digital procurement is right for your organization, it’s important to consider how it will impact you from both a cost and efficiency standpoint. By digitizing procurement, you are effectively equipping your team with the tools to work faster and smarter, not harder. But what makes digital procurement such a game-changer for enterprises?
Here are just some of the benefits of digital procurement:
Track Your Data
It’s easy to lose sight of the fine minutiae of your procurement process, but the only way to see the “bigger picture” is by collecting actionable data to help you understand how you can improve procurement. In a highly manual procurement department, it’s impossible to track data on what was purchased, at what price, when, and for what reason. These insights are made available with digital procurement, allowing for more informed decision-making.
Be Digital Transformation-Ready
For many companies, digital procurement is only one aspect of digital transformation that they plan to pursue. From Accounts Payable Automation to Records Retention, process automation technologies that help you digitize procurement are also effective across other business units. In other words, having these technologies equips your organization with the tools to succeed wherever efficiency is a concern.
Superior Spend Management
Procurement digitalization paves the way for procurement automation, which means a more structured procurement process that suffers from fewer instances of off-contract or non-catalog spending. Purchasers are no longer required to go looking elsewhere for materials from unvetted suppliers you haven’t established rapport with. This means less tail spend and a greater focus on boosting the spend being managed directly by your procurement team.
Industry-Leading Cost Savings
Procurement digitalization connects your organization with its suppliers in more ways than ever before. Of course, cost savings are a primary driver for any process digitization or automation project, but it’s important to underscore this benefit so your organization understands how these savings are being achieved. For example, by consolidating procurement operations to a single platform, it becomes much easier to compare prices. Similarly, users can examine pricing trends to identify when a purchase price seems higher than it should be.
One Platform, Unlimited Possibilities
It’s impossible to understate the value of a single-platform solution. You don’t want your procurement team to constantly navigate from one window to the next to complete purchases. If they can make decisions from one screen without getting lost in extraneous information, it will improve transparency across your entire supply chain. Fairmarkit recommends “sharing data with your suppliers” as this can give you “insight into next-tier suppliers and upstream value chains.”
Anticipate Risk
If 2020 taught us anything, it’s that even the most prepared organizations can’t predict the future. Disruptions to business operations can emerge from a wide range of unexpected sources, and their impact can be significant, especially on supply chains. These interruptions can take many forms, such as widespread health crises like pandemics, geopolitical tensions and conflicts, increasingly severe climate-related events, ongoing economic uncertainty, or even something as simple as simple human error.
With an unpredictable environment, digitizing your supply chain is an effective way to build resilience you are taking the first steps to insulate one of your most business-critical processes against factors you can’t control.
Is Procurement Digitization Right for Your Company?
Procurement digitization plays an important role in your company’s digital transformation, but it’s only one small step in the grand scheme of things if automation is a goal for the future of your company. Ideally, companies that invest in digital procurement will expand their solution to encompass the entire P2P cycle. With an end-to-end solution automating every step of the P2P process, your company can save time and money by identifying and eliminating process deficiencies that hurt businesses.