By: George Mathew
Procurement technology refers to the tools, software, and systems that facilitate and optimize the process of acquiring goods and services, including sourcing, purchasing, and supplier management. Procurement technology enhances procurement by streamlining processes, automating tasks, and improving efficiency. It enables better supplier management, cost control, and data analysis. E-sourcing tools, e-procurement platforms, and analytics software enhance decision-making, reduce errors, and provide insights, ultimately leading to cost savings, increased transparency, and more strategic procurement practices.
During consolidation cycles in the procurement technology space, large players undergo years of merger and acquisition activity that can impact their platforms. These platforms can become unwieldy hybrids of many legacy applications and integrations that have occurred over the course of the enormous shift in technology. While large providers offer extensive coverage, they can also be cumbersome, difficult to implement, and ultimately hinder agility. On the other hand, best-of-breed providers offer procurement organizations the opportunity to implement digital platforms developed during a time when an incredibly rich data and technology landscape is the norm.
Factors to consider during technology selection and digital transformation
Assess ease of integration with the existing system:
Effortless integration with your current systems is essential for IT procurement software. Organizations prioritizing digital transformation must evaluate how software aligns with the digital landscape. A cloud-based digital procurement system allows convenient online access, and easy installation, and typically requires no interaction with backend security protocols. Seamless integration with your existing ERP is vital for any procure-to-pay solution, ensuring accurate financial reporting. Manual processes related to recording IT procurement transactions, invoicing, supplier payments, or profitability calculations introduce error risks in your business operations.
Analysis of customer support and experience is significant:
A procure-to-pay digital platform should be comprehensive, user-friendly, and easy to navigate. This will ensure a better user experience for all procurement activities. We all know that it can be challenging for teams to adopt new digital technologies, but starting with products that are easy to use is a significant step toward helping them. This use of intuitive digital technologies improves the learning curve and increases the adoption of digital procurement processes. It’s important to consider the support options provided by the company. While some companies offer phone support, others provide support through email or chat.
Ensure must-have digital procurement features are included:
When selecting a procurement system for your business, it’s crucial to look for specific features to ensure that it is the right tool. Digitally automating and streamlining certain parts of the procurement process using a system can help you manage it more efficiently. This is particularly important for large-scale procurement processes where a single platform manages various procurement tasks. A supplier management component is a critical feature that every procurement tool should have. In a procure-to-pay solution, it is vital to have an area to manage all your suppliers and maintain an organized digital supply chain.
Visibility into the digital procurement process: an important factor
When contemplating the integration of digital procurement solutions, it’s crucial to identify specific features that align with your business needs. Digital automation and streamlining within the procurement process enhance overall efficiency, especially in large-scale operations where a single platform oversees numerous tasks. A fundamental feature is supplier management, integral to every procurement tool. In a procure-to-pay solution, an organized digital supply chain, encompassing supplier contact details, purchase history, and service level records, is vital for comprehensive management and efficient tracking of crucial information.
How can SpendEdge help companies with digital procurement technology?
Assessing the performance capabilities of technology providers with supplier intelligence:
At SpendEdge we evaluate the capabilities of technology vendors offering solutions for procurement functions. You can gain insights into cutting-edge innovations, distinctive product features, and more. This service aims to provide a comprehensive view of the technological landscape in procurement. Our methodology for evaluating suppliers involves historical filters like revenue and profits, performance, and service quality to find vendors who can bring the desired value to your business.
Identifying technology best practices adopted by peers:
Our team of experts at SpendEdge can assist you in studying how other companies within your industry are utilizing technology solutions to improve their procurement functions. By analyzing the best practices adopted by peers, you can ensure a strategic approach to integrating technology into your procurement process. With our help, you can extract valuable insights from industry trends and practices.
Understanding main KPIs and SLAs to carry out performance evaluation:
Our specialists can help you acquire a comprehensive understanding of the main KPIs that are essential for evaluating the performance of technology vendors. Additionally, we can assist you in identifying the critical SLAs that should be included in your contracts to ensure the delivery of high-quality services. We offer our expertise in defining and implementing effective KPIs and SLAs, which will enable you to optimize your relationships with technology vendors and ensure service excellence.
How SpendEdge can help a specialty chemicals company
A European specialty chemicals company deals with a large number of raw materials sourced from multiple countries across the globe. Since the production process was highly dependent on the timely delivery of the required raw materials, managing orders and real-time tracking of raw materials during transit is critical for the client. Hence, they wanted to know how their peers were managing inventory, if they were using better technology solutions in their procurement process, and which vendors could support their objective for a more improved procurement function.
SpendEdge analysts conducted a best practices analysis wherein the processes being followed by other chemical manufacturers around the world were assessed. The technology being used and process improvement steps that have been implemented by the companies in recent years were also evaluated. In addition, a list of vendors that provide a suite of technology products to support the procurement function was also identified. Their capabilities were mapped to identify the best-fit vendors that could support the client’s needs.
Our recommendations helped the client make changes in their procurement process which helped them manage inventory and vendors better. They saw improvement in order placement and tracking. From the list of technology vendors shared, the client was able to shortlist 3 vendors who were invited for the RFx process.
Contact us now to solve your procurement problems!
Associate Vice President, Sourcing and Procurement Intelligence
George is a procurement specialist at Infiniti Research and provides advisory services to clients across the pharmaceutical, CPG & FMCG, energy, and automotive sectors. He specializes in the procurement areas of industry benchmarking, cost modeling, rate card benchmarking, negotiation advisory, and supplier intelligence.