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February 11, 2019
People + Digital = A value multiplier for procurement
By: Kristin Ruehle

Enablers that improve procurement have been around for a long time. Digital is chief among them today. What’s different is that the value of digital enablers in procurement comes from how they are integrated with people at the point of need. Done well, this harmony of people and digital can deliver new outcomes.

Here’s a perfect example of this. I was in an unfamiliar city and wanted some coffee to start my day. Without even thinking about it, my first course of action was to use a navigation app on my phone. All I had to do was press a button and I could locate all the coffee shops within walking distance of my hotel. I chose the nearest one and soon got my desired outcome: a caffeine fix.

So, a digital tool provided me with quick, accurate and relevant information. Then I used my judgement to make a choice based on my circumstances. This is exactly how digital enablers transform procurement. It’s not about digital in isolation. It’s about how digital is infused with people and processes to unlock value. This is happening in our work with clients across the source-to-pay journey.

The dynamic duo in action

Sourcing. Digital tools provide tremendous value to our sourcing leads, client sourcing managers, client business stakeholders and suppliers. Sourcing teams use intelligent tools to efficiently execute RFX and incumbent negotiation activities. And cloud-based multi-client platforms use robotic process automation and intelligent automation to distribute critical information to stakeholders across geographies.

But making sourcing decisions does not depend on the quantity of information. It depends on the quality of insights. That’s where people come in. Armed with market intelligence from digital tools, sourcing teams make decisions with their expert understanding of markets, suppliers and stakeholder needs. They also factor in personal experience. This is so critical. Think of it this way. A supplier might have a stellar track record of on-time delivery with other customers. But if you consistently received late deliveries, there’s no good reason to continue with them.

Contracting. Digital tools cannot do the work of contract negotiations alone. Legal teams focus on strategic negotiations. Business stakeholders or engineers ensure product specifications are correct. And suppliers validate the contract terms and pricing. What’s exciting is how digital enablers can facilitate the interactions among all these people for one seamless process versus the typical redlining in Word and exchanging over email.

Digital enablers also automatically capture and archive relevant parameters for large contracts quickly and enhance contract documentation and tracking. This reduces contract cycle time among other benefits.

There’s a new equation for producing outcomes in #procurement: people + digital = value.
 
 

Purchasing. In an ideal scenario, all purchase requests reference pre-negotiated pricing with a preferred supplier and the experience is "Amazon.com Inc." inspired through digital enablers like eCatalogs and portals. We’ve helped some clients get to 80 percent touchless process rates by using the built-in features of eProcurement tools to streamline connections among systems, buyers and suppliers. For spot buys, identifying potential suppliers and confirming their capabilities are time consuming tasks impacting time sensitive requests. What if digital enablers could aggregate a supplier profile and recommend suppliers based upon your specifications? This would substantially reduce the turnaround time on these requests while mitigating risk by introducing unknown and/or unqualified suppliers.

Greater than sum of the parts

This exploration runs counter to the belief that digital procurement means automating everything and “doing away” with people. Sure, some transactional processes can be fully automated. But with the core focus of procurement being risk mitigation and cost management—and all of the relationship dynamics that naturally play into that—there should always be gray areas that only people can address.

So the way I see it, people and digital each have important—yet distinct—strengths in procurement. It’s up to us to find the preferred ways to harness them both.

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