Digital procurement is the application of disruptive technologies to each part of the procurement process, making it more predictive, automated, efficient and measurable. Digital transformation should be a part of your procurement strategy if it is not already today. It requires boldness, resources, time, and unwavering commitment.
In fact, per Ardent Partners research on the Data Revolution just earlier this year, 38% of procurement leaders did indeed have digital transformation in the plan.
But then inflation moved from transitory to not, Russia invaded Ukraine, the Fed started increasing rates, and a series of other economic factors happened along the way. Procurement leaders have started to pivot to address current day issues and calls from the others in the C suite for help. Teams are researching commodity indexes to determine if supplier requests for price increases are even in line.
So, what to do now. Will solving for the immediate problems of today impact the unwavering commitment to long term planning and transformation?
Is digital transformation still wise, in light of inflation and rapidly changing economic conditions?
Can they be done in tandem?
With prices likely not stabilizing materially for 12 months, our position is a resounding yes. For two reasons.
- Long term planning is still critical and will enable future changes to be “in time” changes post transformation.
- The digital transformation process itself enables you to make impact now and build the foundation for future.
Let’s dig into why.
The case for change, now.
We are in interesting times, and some economic numbers haven’t been seen in decades.
But change is inevitable.
There will always be new market dynamics, staff changes, and competing priorities. There will always be tradeoffs. Letting any of these curtail your digital transformation plan can lead to a paralysis.
And, not moving forward with a digital procurement transformation will result in your inability to address market dynamics “in time” next time. And there will be a next time, of some form. On the other side of a digital transformation, procurement’s ability to move quickly, make data-based decisions, move the needle on efficiencies, assess and find suppliers, and leverage benchmarking will be far better than today. And your entire organization be better at managing the long-term consequences of inflationary markets. To get ahead of all of this, you need to start or continue to push forward your digital journey now.
The process itself can drive short term impact.
Key to a successful digital transformation is prepping for the change, which includes data, design and cross functional stakeholder collaboration. For Wonder Services, these are incorporated in our Discover and Design stages of our approach. Executing on these stages will in and of itself bring short term value – assistance in dealing with inflation, supply chains and pricing terms.
Messy data is universal. As part of our case for change and detailed planning, we review and incorporate what it will take to transform or cleanse your data. It is not an obstacle anymore, just part of what needs to be corrected to reach your goals.
Stakeholders are likely focusing on data at this time already; costs, inventories, supplier performance, service agreements to name a few. Capitalize on this need and let the pre planning process provide an opportunity to help uncover the data your stakeholders are searching for. This will also uncover the data gaps, bringing even more awareness that transformation is needed.
With procurement running point, the process will uncover data across functions and suppliers. This will arm procurement and business leaders with intel needed for supplier dialogue regarding price increases. As we work with you to pull and cleanse data, we will enable smarter decisions, now, around true operational costs and opportunities to protect margins
Another short-term benefit of the process? Minimizing supplier risk. As we work on supplier alignment, a significant amount of data on incumbent suppliers will be captured. And new suppliers can be introduced during this process, combatting, if needed, growing concentration of supply and risk.
Cross functional design
The case for change process will pull cross functional stakeholders into the planning and design process. This will bring enterprise-wide visibility to immediate priorities and initiatives that can drive efficiencies in the short term, and can be addressed as part of the process.
Leveraging this broad view of functions, data, gaps and pressing initiatives, we also begin designing the process for the future state, post transformation. We use design thinking and the voice of customer principles to move you to best-in-class processes, inside and outside of your digital solution.
This can provide opportunity to capitalize on current state findings while the project team continues on the digital transformation path – in tandem. Then we embed the learnings and improvements from this challenging period into our go-forward operating model. Viola – you’ve now addressed today’s inflation, brought critical data visibility into the decision making, acted on some current wins, all while transforming your organization for long term success.
So, although current economic conditions might seem like a good reason to put off or slow your digital procurement transformation, doing so would be a mistake. These are two key reasons why you should pursue this initiative now – even in the face of rising prices and other challenges. Digitization can help you overcome inflationary pressures and save money on purchases. And, it can give you a competitive edge by helping you get the products and services you need faster and more efficiently than ever before. We would be happy to share our insights with you and help you get started on your own digital procurement journey. We look forward to helping you procure smarter and better now, and in the years ahead. Bring Wonder.