Procurement Undergoing Digital Revolution

New Deloitte Study Says Procurement Undergoing Digital Revolution. (source: SupplyChainDigest)

Deloitte's fifth global survey of procurement executives, says the rise of digital procurement strategies is emerging as a key focus area, supplanting talent management as the top strategic priority for procurement organizations.

Deloitte received 334 responses from senior procurement executives across 33 different countries, with combined revenues across the respondents companies of some $4.4 trillion annually.

In the introduction to the report, Deloitte says that "In much the same way as sales forces, channel management and consumer engagement have been transformed by disruptive digital technologies over recent years, so we expect the same to occur for the supply-facing assets of the business."

The report call out "cognitive analytics" for redefining scenario analysis, "crowd sourcing" for improving procurement's reach and creativity, and mobile analytics for real-time performance management as examples of these digital technologies in procurement, noting that "the potential for these digital solutions to transform the procurement value proposition is considerable."

It later adds that "It might be soon that the differentiation of leading procurement practice might be defined less by the war for talent, and more by the war for technology," noting not surprisingly that technology will increasingly automate most if not all of traditional procurement execution process that today are performed by humans. However a significant 62% of respondents said their teams lack the skills to effectively deliver overall procurement strategies. That was up from 57% in the previous year's study, and is part of what Deloitte calls a five-year downward trend in matters relating to procurement talent.

Perhaps surprising are the results showing that the interest in outsourcing procurement activities, all the rage in the mid-2000s and a bit beyond, seems to be cooling. Interest in outsourcing dropped in all five procurement processes covered in the survey versus last year's results, and the area for which the highest percentage had interest, "operational buying," was selected by only one in four respondents.

Deloitte says other executives in companies have a simple wish list: "Deliver more insight on-demand to inform my most strategic decisions; and at the same time, make day-to-day execution ruthlessly efficient, lightening quick and transparent."

Deloitte sees digital technologies as being essential to achieve these lofty goals, and says there are two paths to follow:

First are "upstream" or strategic initiatives, where such technologies as advanced analytics and crowd sourcing might be deployed. The second path relates to operational and transactional processes, where technogy will enable more self-service and automation of current processes.

"Procurement is effectively positioned to join the digital revolution," Deloitte concludes. "It can offer a radically different value propositon to the organization, one that removes the traditional process-led bottleneck and the need to allocate significant human resources to still essential transactional tasks."

See the full article in SupplyChainDigest