Six steps to tackle the digital transformation challenge in procurement
Technology is ever-changing, making it a mind-boggling field of exploration. Here are six steps you can take to help tackle the digital transformation challenge in procurement.
1. Start with a vision
Consider the big picture of where you’re trying to get to and why.
2. Analyze your requirements
What is your key deliverable to the business? Is it agile buying processes, cost savings, supplier quality, risk control, access to innovation and new revenue streams or something else? Invest time considering how and where technology and people will each add value. How does purchasing this tool or employing that system help your procurement function meet its core requirements and contribute to the overall aims of the business.
3. Build a digital roadmap and prioritize
Digital transformation is an ongoing journey and it’s vital to keep on top of it. To facilitate and carve it into manageable chunks requires an agile roadmap. Remember your vision, the point you want to get to and then divide up the actions you need to take. Decide what you hope to have achieved in the first 3 to 6 months, then what you hope to have done after 18 months and so on. You’ll need to be flexible to cope with changes but at least you’ll be clear on where you’re trying to get to and why. Corporate priorities may change but the core requirements will remain.
Use your data to your advantage and build a platform that enables reuse of knowledge to drive faster cycle times and better results
4. Take small steps
Dare to take smaller steps that make a high impact, for example using ‘should-cost’ tools (tools that build up the expected cost of goods through market intelligence) that can influence product costing and profitability discussions with suppliers. Small success build momentum.
5. Invest in the appropriate technology
Be careful about investing in complex technology suites that may overwhelm people and contain functions you are never likely to make full use of. If you do go for that investment, consider whether you have the right skillset in your organization to make it a success.
6. Use your data and take prompt action
Use your data to your advantage and build a platform that enables reuse of knowledge to drive faster cycle times and better results. This can come in a variety of forms including benchmark prices, granular detail on cost drivers, and live total cost of ownership information. Don’t just collect and analyze it, make sure you use it to take prompt action to address supplier risks and formulate strategies.