We all know that digital transformation provides many benefits to businesses. However, the result can be surprising when we look at the gains it can offer to a company’s procurement area.
In this post, we will present the key insights from a report called “World Class Procurement: Redefining performance in the digital age”, by the Hackett Group International Consultancy, a leading benchmarking and best practice company for global businesses.
See a summary below!
Digital transformation for the procurement area
According to the study, procurement areas using 4.0 technologies can achieve cost reduction levels of up to 17%. However, when they truly embrace digital transformation – that is, when there’s a mindset change and not just the occasional use of certain technologies – they can reduce their spending by 45% or more.
The report addresses also the importance of freeing professionals from routine and repetitive activities, giving them more time and conditions to be strategic. Robotic solutions can be deployed through digital transformation, to help decreasing process errors and, of course, achieve more profit.
After a change of behavior, organizations will have to decide how to use the cost reduction enabled by digitization. It can be perhaps a great opportunity to invest in employees, qualifying them for more strategic and important business tasks.
About the “World class procurement: Redefining performance in the digital age” report”
The consultancy firm divided its report, for local and multinational companies, as benefits of digital transformation.
Cost reductions for world-class organizations were greater, with savings of up to 43% through automation, and 55% when they deployed digital transformation as a whole. It’s noteworthy that automation, in this case, refers to the use of bots to replace operational labor. Digital transformation, on the other hand, impacts a company in a “holistic” way, including even a potential restructuring.
A vital factor in this study is that organizations are investing in technology, but forget to invest in human resources and professionalization. This doesn’t mean that the company needs more people to handle digitization, but more qualified professionals to face this new scenario instead.
These changes will help companies accelerate their procurement processes – which is a valuable feature, considering the importance of speed in our days. They also provide a detailed view of spending with every supplier, which allows greater bargaining power, to further leverage the sector. This is just one example of the thousands of data the company will access, in order to build a strategy that will be more aligned with its business.
As organizations collect and analyze more data, technologies can be enhanced to streamline all processes.
However, deciding how to conduct the digital transformation steps will vary with each company’s core. There isn’t a standard plan to follow; each company must create its own digital agenda, to deploy each step without impacting the organization’s goals.
Did you like these insights on digital transformation for procurement? Then leave your opinion in the comments area.
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