Procurement and Supply Chains for the Digital World

Baskar Radhakrishnan, Director, SAP Ariba at NTT DATA

Many enterprises still rely on legacy systems to process transactions through outmoded technology and dated resources. While these models perform their basic functions, the era of digital connectivity and ubiquity allows for improved efficiencies and interconnectedness.

Enterprise-level procurement has benefitted greatly from digital transformation, primarily due to its importance in B2B interactions and overall profitability. More than most business units, procurement can manage cost savings by implementing new technologies and digitally-focused processes that lead to well-managed, highly visible and efficient procedures, which in turn improve business operations, competitiveness, and corporate strategy.

The wide-spread adoption of B2B ecommerce helped spur changes to procurement and supply chain systems. By moving away from legacy systems and expensive electronic data interchange, businesses can now operate in flexible and affordable online platforms, while taking advantage of cloud-based solutions that reduce costs and streamline procurement and payment processes, as well as improve visibility across global supply chains.

Improving procurement, ordering, invoicing, and payment efficiencies are not enough alone to stay ahead of competition

This procurement revolution leverages advances in cloud, mobility, big-data analytics, and IoT, resulting in digital systems and supply chains that are more data driven and operate at a higher level than ever before.

The benefits of digitally transformed systems and supply chains are broad and significant. For example, according to Tech Target, SAPAriba’s procurement solutions can deliver results, such as:

• 60 percent lower operating costs
• 1-8 percent reduction in supply chain costs
• 50-75 percent faster transaction cycles
• 90 percent fully automated transaction processing
• 60 percent improvements in order accuracy
• 5-20 percent increases in revenue with new customers
• 30 percent or more higher share of wallet with current customers
• 15 percent improvement in retention rates among customers

While automating key processes is essential to keep a business competitive in today’s digital world, improving procurement, ordering, invoicing, and payment efficiencies are not enough alone to stay ahead of competition. In order to thrive, businesses must analyze internal and external procurement data and make necessary adjustments in order to be successful and outpace competitors.

Collecting and analyzing transactional and operational data combined with data from customers, prospects, partners and suppliers provides businesses with an overarching picture of their procurement and supply chain system management. These insights empower executives with visibility into direct and indirect spending across global accounts, which allows procurement executives to identify opportunities for consolidation, cost reduction, and process improvement. By so doing, business can achieve active participation in developing more strategic, business-driven goals, such as discovering new business models, capitalizing on product and service enhancements and identifying untapped revenue streams.

Within an enterprise, synchronizing end-to-end business processes to extended supplier and partner networks is a challenge. However, this becomes especially difficult when working with rigid supply chain and procurement legacy systems responsible for multiple businesses and networks.

Digital transformation and cloud-based solutions enable enterprises to incorporate a robust, unified platform that supports close collaboration. According to research presented by SAP Ariba, collaborative supply chain and procurement networks deliver quantifiable business value, including:

• 60 percent improvement in order accuracy
• 50-70 percent faster transaction cycles
• >90 percent “touchless” transaction processes

Furthermore, collaboration between vendors, buyers and partners is ideal for cutting costs, increasing efficiencies and improving overall supply chain productivity within a procurement environment. Collaboration and digital transformation will also continue to play a vital role in designing future-proof and flexible systems as technology continues to evolve.

According to Arden Partners, business leaders across various industries are optimistic about the future of business procurement networks:

• 55 percent agree B2B networks will eventually become the main platform for trading partners to conduct business
• 73 percent believe B2B networks enhance collaboration between buyers and suppliers
• 75 percent agree B2B networks are beneficial to buyers and suppliers
• 54 percent agree B2B networks are an increasing source of new business for suppliers

Maintaining legacy systems will inhibit businesses growth as the digital world continues to encroach on enterprise environments. By embracing digital transformation with procurement and supply chain systems, businesses will see drastic changes to current processes and efficiencies that will keep up with evolving technology, while also reducing long-term investment spending and providing a flexible structure for continued change.