Procurement 2016: The Supply Chain Goes Digital

Emily Rakowski

The world today is a different place. There are officially more mobile devices than people. And with increasing frequency, we use these devices to manage our lives. To shop. To pay for things. To find restaurants and hail cabs. To network with our friends and family. Many of these same technologies have made their way into the enterprise. And they are transforming the way we work. Business networks, for instance, are changing the way we discover, connect, and collaborate with our trading partners. They are giving us access to insights and intelligence that allow us to make better, more informed decisions. They are, in essence, transforming procurement as we know it.

So what does the future hold? Here are five trends to watch:

1. Supply chains will go digital

Technology has driven a new wave of productivity by digitizing key financial and business processes and enabling collaboration across the organization. This trend will continue as best-in-class organizations leverage business networks to create a digital community of partners executing coordinated processes in a more organized and informed way than in the past.

2. Collaboration will increase – and fuel innovation

Many companies have taken steps to improve the efficiency and effectiveness of their supply chain operations by automating key processes such as procurement, orders, invoicing, and payment. And with good reason. Research shows that companies who have embraced digital strategies are seeing real value, boosting revenue more than nine percent, market valuation more than 12%, and profitability by over 26%.

Led by procurement, many of these companies will take things to the next level and enable new processes that drive more collaborative, intelligent, and transparent ways of operating. Processes like dynamic discounting that allow them to secure discounts that can be reinvested in research and development and funding to expand their business. Contingent workforce management through which they can identify and manage highly specialized resources needed to develop that next-generation product. Or joint solution development where they get innovations that enhance their products, and their partners get something they can market to others in the industry.

3. Business will run simpler

Personal networks from Facebook to Twitter have made it simple for consumers to shop, share, and consume in new and more informed ways. Business networks provide an equally easy and scalable way for companies to discover, connect, and collaborate with the trading partners and resources they need to operate in today’s dynamic world. Procurement will tap into these networks to create a simple, consumer-like experience where, with just a few clicks, they can shop for goods and services, place and manage orders and pay for them electronically, and view and manage spend across all major categories through a single, connected platform. With network-based spot buying they can also improve the purchasing process for low-value, non-sourced items and eliminate maverick buying.

4. Lines will blur

Fueled by digital technologies, procurement will take the lead in integrating business processes and collaborating across functions in entirely new ways that drive value. Chief procurement officers (CPOs) will, for instance, engage in helping to manage the financial supply chain, turning payables into a profit center because they have real-time visibility into whether an invoice is okay to pay and whether it has been matched against purchase orders and contracts. Or extending days payable outstanding to improve the overall balance sheet while at the same time offering early payment discounts to suppliers to mitigate both financial and supply risk. According to Future of Procurement, a recent survey conducted by Oxford Economics, 54% of executives say that procurement managing accounts payable is significantly changing the way the function operates.

5. Procurement will get smarter

Like their social counterparts, business networks house incredible amounts of insights and data. Procurement will unleash the power of this information to optimize their supply chain decisions and accelerate innovation and growth. They may, for instance, access performance ratings on potential trading partners along with recommendations from the community to determine who to do business with. Or detect risk across the multi-tier supply chain based on world events and geo-political risk factors. They might combine in-the-moment demand data with historic trends to predict stock outages before they happen and direct replenishment. Or gain real-time insights into invoice approval status to more efficiently manage cash.

In today’s global and connected economy, digital supply chains are the on ramp to innovation and success. And if you want to be among the winners, you need to get on the highway and go fast. Start today by re-imagining your supply chain. Develop digital strategies that allow you to proactively evolve ahead of the competition. Employ comprehensive solutions that support the entire source-to-settle process and create value for all parties involved in it.

Don’t just think about the future, see it and shape it to your advantage.

Emily Rakowski is Global Vice President for Ariba, an SAP Company.

For more on the future direction of sourcing and procurement, see The Future of Procurement, a series of reports by Oxford Economics.


Emily Rakowski

About Emily Rakowski

Emily Rakowski is the Global Vice President, Audience Marketing and Demand Management, SAP Ariba. She is an entrepreneurial and passionate marketing and demand management executive with 20+ years leadership experience in the software and consulting industries.