The procurement department has clearly benefitted from advancements in technology. Costly, time-consuming processes that used to require paper, a telephone, and/or a fax machine, for example, have been replaced with more modern approaches. Now, whether they are using mobile devices to track inventory and place orders, advanced software programs to manage supplier relationships, or cloud-based computing options to gain end-to-end supply chain visibility, today’s electronics buyers can leverage myriad tech-based tools designed to streamline the procurement process.
The scenario was very different just 15 years ago.
“Rewind back to the 1990s and procurement was on the cusp of gaining real relevance within the organization,” says Andrew Bartolini, chief research officer at Ardent Partners, a Boston-based industry analyst firm. “Everyone suddenly realized that if you can buy smarter and more efficiently—and identify the right suppliers—procurement itself adds an extraordinary level of value.”
Fast-forward to 2013 and Bartolini says procurement has gotten to the point where chief procurement officers now report directly to their companies’ CEOs.
“That would have been unheard of just 15 years ago,” he points out, adding that the broad transformation of the procurement organization has been enabled by technology—much of it designed to enhance and streamline the purchasing process. Using technology, procurement departments can:
“Thanks to technology, buyers are no longer back-office order takers,” says Andrew Bartolini, chief research officer at Ardent Partners.Shake off the “order taker” image. Buyers are using technology to position themselves as entities that are strategically aligned with the organization and its objectives. By automating the procurement process, for example, organizations can gain a clearer picture of the 30% or more in assets that are spent on goods and services annually and make more effective decisions around purchasing, inventory, and disposition. “Thanks to technology,” says Bartolini, “buyers are no longer back-office order takers.”
- Stand out from non-optimized competitors. Sure technology has infiltrated most corners of the business world, but the company that has the state-of-the-art, automated procurement process that enables real-time, end-to-end visibility remains at a competitive advantage. “Organizations that lack an automated procurement process at this point really aren’t optimizing the opportunity that’s before them,” says Bartolini. “Meanwhile, hundreds of organizations are already out there, seeing the benefits and reaping the rewards.”
- Get an accurate window on direct and indirect spending. Getting a gauge on exactly how much money is going out the door annually to pay for both direct and indirect materials is an ongoing challenge for most purchasing organizations. Technology has made the process easier, according to Bartolini, who points to spend analysis software as an important tool for firms looking to get a better handle on spend. These on-premise and cloud-based solutions aggregate and classify data, and then allow buyers to generate reports that can be analyzed and/or shared with other team members.
- Gain efficiencies with online sourcing and procurement. The emergence of e-sourcing and e-procurement have helped buyers get more done in less time. These web-based tools allow buyers to either source or acquire (or both) products and services, thus “collapsing the time it takes to run each project and helping buyers gain significant efficiencies,” says Bartolini. “They can not only do more in a compressed amount of time, but they can also do their jobs better.”
- Select suppliers based on accurate metrics. Technology now plays a key role in the supplier selection process, according to Bartolini, who sees more companies using spend analysis tools to figure out expenditures-per-supplier and leveraging that and related data to make solid supplier selection decisions. The process also helps mitigate supply chain risk—yet another key concern for organizations operating in today’s unpredictable business environment.
Don’t expect the push to use more technology to level off in the procurement organization anytime soon, says Bartolini, who sees continued momentum on the automated and digital fronts.
“The movement gradually increases every year and is driven by the benefits that the technology solutions are delivering to users,” says Bartolini. “As the solutions become even more useable, affordable, and simpler, the number of procurement organizations using them will continue to grow.”