What is digital innovation?
It’s very rare when an organisation is so on point that others use them as a standard. Amazon anyone? The ability to have most of your processes fine-tuned and in sync is something that most businesses are often trying to accomplish. These types of changes can take years to take effect. Unfortunately, most businesses moves at pace and organisations can’t afford to wait that long. Many areas of the organisation including marketing, sales, and service departments have already eradicated outdated ways of operating.
The topic of digital innovation in the procurement process seems to be the one area that tends to get overlooked. Why?
For a start, depending on the type of organisation you are and what you’re offering, you may not have a serious need for a strategic procurement process. You’re not going to invest your time in an area that doesn’t return much value or can be handled on a case-by-case basis. If you are an organisation that has a robust, outlined procurement process, you may be more comfortable sticking to what works than thinking about changing the whole thing. The whole idea of digital innovation isn’t change for change’s sake, but rather to enforce best-practices standards, and improve current processes for the betterment of the whole organisation.
What makes a true digital innovation in the procurement process is the ability to automate the process to provide value and efficiency to the whole organisation. Increasingly big data is the driving force behind the majority of innovations. Every one of your processes should be able to provide insights and analytics for decision makers to use to help make strategic decisions.
Enhanced visibility and better analytics
Procurement isn’t restricted to just one area of the company. Almost everyone in the organisation is affected by it in some way. The problem with many current procurement processes is that they may lack the advanced insights necessary to make sure everyone is on the same page. Stakeholders in the organisation need to be able to quickly access data that can help justify business decisions and guide future strategic plans. Purchasing transparency supports the enforcement of proper and ethical procurement procedures.
Improved productivity and collaboration
A procurement process should allow for maximum productivity for those involved, and clear collaboration with other departments in the organisation. When the procurement process operates in silos, it makes it harder for other areas such as IT or R&D to get involved with purchases that may relate to them. Additionally, siloed procurement overlooks volume-based discounts that can result in better pricing for the buyer. When a team can make decisions from one centralised source of data and information, the better those decisions are for the organisation.
Enriched vendor relationships
Building strong relationships with your vendors is key for a successful post-procurement process. The relationships with your vendors are not simply transactional – they don’t stop after the purchase is made. For a successful partnership between the two organisations to happen, you need communication. As part of the procurement process, purchasing managers need to gauge how successful that purchase is by having a platform to provide insights, and the ability to collect feedback. The data collected from each purchase can help with deciding the next purchase and the overall relationship moving forward.
Overhauling your procurement process isn’t going to happen overnight. It’s the steps your organisation takes every day that will pave the way to digital innovation.
Four Business Solutions
Four Business Solutions helps small and multi-national organisations enrich the way they work. From supply chain to procurement and contract management, we have decades of experience helping companies forge ahead in the global market. If you’d like to find out more please call John O’Brien at Four Business Solutions on 0800 6250 025.
John O’Brien is the CEO at Four Business Solutions, global business consultants and software integrators providing business processes improvements in Finance, Supply Chain & Operations, across a broad range of industries.