The goals and ambitions procurement and logistics executives have for more sophisticated web-based, or digital, procurement exceeds their current capacity to carry it off.
That’s among the major conclusions of a new survey on digital procurement trends from global procurement technology and services provider SAP Ariba, a unit of business operations software company SAP SE. The survey of 452 procurement and logistics managers from diverse industries, including automotive, financial services, discrete manufacturing, consumer products and retail, chemicals and life sciences, finds that while 83% of executives see the “digital” transformation of their procurement program as a top priority, only 5% of companies have the full systems and technology in place to make it happen now.
Marcell Vollmer, chief digital officer, SAP Ariba
“Only five percent of respondents have highly automated processes,” says SAP Ariba chief digital officer Marcell Vollmer. Despite being largely non-digital now in the wake of software and services that would make procurement, supply chain and finance operations more automated and efficient, 63% of executives say a digital technology update is “on the roadmap,” compared with 31% that are undecided and 2% that have no plans to implement.
Today, the biggest technology procurement and logistics managers have in mind for going more digital is robotic process automation.
Robotic process automation is an application of technology that allows companies to configure a computer software “robot” or “bot” to capture and interpret information from existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems, says the Institute for Robotic Process Automation and artificial intelligence. For 20% of companies, robotic process automation is their top choice of a program to better automate their procurement process compared with 17% for artificial intelligence and 15% for machine learning. “IoT is the most commonly used technology but organizations plan to invest in robotic process automation and artificial intelligence over the next 12 months,” Vollmer says.
When the survey asked companies to name the technologies they’re already using, 22% said IoT applications for some aspect of their procurement, supply chain and finance operations, compared with robotic process automation at 19%, artificial intelligence and cognitive computing at 9% and machine learning at 8%.
SAP released the study at a time when it and other companies are working to improve procurement and supply chain systems by incorporating in them more artificial intelligence, IoT and other technologies. SAP Ariba, for example, is integrating its procurement technology with SAP’s cloud-based databases and IoT sensors to monitor when a product or component needs to be replaced, then automatically trigger an order of a replacement product or part. The company is also developing a procurement bot powered by artificial intelligence designed to learn a buyer’s preferences and procurement policies to produce more accurate and useful procurement transactions.
SAP Ariba and IBM Corp. are co-developing procurement applications designed to match buyers with the most appropriate suppliers, and helping them set contract terms mostly likely to close deals and increase sales volume. In other cases, companies are beginning to develop systems of IoT sensors placed on goods to track how they move through supply chains, helping them to compile and analyze such data as the delivery performance of individual suppliers.
Other findings from the SAP Ariba survey include:
- 88% of respondents have objectives defined for better procurement automation.
- Procurement most commonly reports into the chief financial officer, chief procurement officer, or chief operations officer but organizational reporting structure varies and is fragmented.
- 30%of survey participants see talent management as a roadblock, but 63% don’t have a management strategy to address it.
- Analytics, data quality and budget restrictions are the largest roadblocks to achieving better efficiency using digital services to enhance procurement.
- Hard savings, cost avoidance and compliance are the top means to measure procurement performance.
Going forward, more than half of the executives taking part in the survey, or 55%, see the role of chief procurement officer morphing into more of a role strategic role, especially with a title such as chief value or collaboration officer. “Most see the role as evolving,” Vollmer says.
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