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April 9, 2018

Way to Next-Gen Procurement - Part 1



The way to next-gen procurement - Part 1


Procurement today is very different from how it used to be twenty years ago. Previously, the job of procurement involved making phone calls, generating purchase order copies, manually creating invoices, etc. Today, it has evolved into a function that uses an efficient people + software approach that leverages state-of-the art packages like Ariba, e-procurement, SAP SRM, Oracle iProc, etc. But that's not all; change is the only constant and so one can expect more disruption in this space.


For now, the topmost question on the minds of almost every chief procurement officer (CPO) is: how do I leverage latest technologies like digital transformation, robotic process automation, machine learning, and design thinking to enhance procurement function? CIOs also face the same challenge since procurement depends on IT. To answer this, I suggest evaluating how some of the popular IT tools can be used to drive change. While I have chosen SAP for this example, the same approach can be applied across other tools and technologies.


In my view, the evolution of the procurement IT landscape for a large organization involves four stages - basic, starter, enabled, and cognitive. It looks something like this:



While some organizations have leapt straight to the 'enabled' phase, many are still in 'basic' and 'starter' modes. For these companies, investments tend to be focused on sourcing and order management to meet pressing priorities and realize tangible results. However, they should aim at quickly reaching the 'enabled' phase in areas like spend analysis and supplier management. These are may not be urgent but they are critical to control future spend.


The 'cognitive' phase is the apex of the evolution today. Many organizations are already reaping the benefits of using machine learning tools in procurement. However, operational and tactical issues persist such as choosing the right ML tool, identifying potential opportunities, creating strong governance, increasing return on investments, etc. On the bright side, once these companies begin their transformation journey and leverage ML in areas like supplier risk management, spend analysis and sourcing, they will realize returns faster and streamline procurement into a lean and agile function.


Check out my other blogs in this series to know more about transforming procurement through cloud vs. on-premises IT infrastructure and insourced vs. outsourced procurement process execution.


March 23, 2010

Centralized Procurement through SAP SRM - the next great wave of savings - Part 1

Continually changing turbulent economic environment is forcing organizations to adopt innovative business strategies to stay competitive, efficient in order to achieve highest level of benefits to the stakeholders. Procurement function is playing an ever increasing role in this transformation journey and its importance is becoming increasingly visible.

Continue reading " Centralized Procurement through SAP SRM - the next great wave of savings - Part 1 " »

August 25, 2009

Green ( Purchasing? ) SRM….

Recently, a thought struck me on while most of the SRM projects are judged on the basis of ROI, process efficiencies achieved, transactional savings etc., can they also be judged on the basis of environmental impact pre and post implementation?

Continue reading " Green ( Purchasing? ) SRM…. " »

March 9, 2009

Challenges CIOs face in architecting right procurement transformation strategy

CIOs today are facing a challenging situation especially when it comes to the technology support for procurement domain. The challenge is not in realizing whether technology assistance in procurement domain will help already troubled organizations or not. CIOs are pretty clear that any benefit in this area is right away transforming into bottom line savings and hence is a definite candidate for technology aided alignment.

Continue reading " Challenges CIOs face in architecting right procurement transformation strategy " »

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