Emerging Trends Shaping the Future of Procurement and Supply Chain
In an ever-growing world of internet, data storage and low-cost computing are gathering momentum with advancements in mobile technology which are redefining businesses and are adding value to procurement processes. These disruptive technologies are enabling an altered environment where strategic sourcing is becoming predictive, transactional procurement is becoming automated and supplier management relationship is becoming more proactive.
These changes have been envisaged owing to the availability of previously unavailable data as well as order being brought to unstructured sets of data which has led to improvement in operations. The digitalisation is helping companies to track market spends and also keep an eye out on the digitised markets. These have been phenomenally supported by the new and agile operating models that are accelerating the growth of analytical and digital capabilities for entrepreneurial businesses.
Though for companies taking the digital route has not been fairly simple, it has contributed to enhancing the role of legacy systems within the company with payback measured in months instead of years.
There has also been a rapid shift in technologies until they are accepted and adopted as core platforms in a company. Today, several forms of core procurement technologies are deployed in companies, such as eSourcing, eProcurement including eInvoicing and eCatalogs and contract management. These solutions which are significant for companies’ prospects are characterised by systems integration and significant capital spends. However, with respect to deployment, these technology-oriented solutions are quicker in comparison to core solutions. They do not need heavy resources for integration, have no dependence on prepared data sets and can also start producing outcomes in a relatively short period of time. For example, there is Software as a Service (SaaS) which is a software licensing and delivery model in which software is available and licensed on subscription basis and hosted centrally via integrated suites such as Office365, Salesforce, Cisco WebEx etc.
Some of such prominent digital solutions have entered the maturity phase and it is an opportune time for companies to utilize them and take advantage of these fully-developed systems. Nevertheless, as the technology industry is always in a state of flux, the procurement segment will witness newer trends such as following:
Usage of artificial intelligence and cognitive computing: In times to come, procurement processes will be more inclined towards machine learning algorithms and pattern recognition software in order to categorise contracts, cost, unstructured spends and supplier data such as travel expenses (T&E) systems extracts to create opportunities and new insights. Using cognitive applications like Chatbots, automated communication could be provided for a range of supplier queries, thus reducing the administrative efforts in procurement.
Content extraction: Reading unstructured documents like specification drawings, PDFs of contracts and bills of material as well as extraction of data sets like payment terms, termination clauses and pricing tables through learning algorithms with the use of Optical Character Recognition or OCR.
Analytics: By the combination of artificial intelligence, machine learning, modelling and statistics with third-party sources, many of the future predictions like demand, supplier risks or cost or price fluctuations can be done which will aid in quick and clear decision-making.
Data visualisations: Since data requires simplification for comprehension and analysis, graphical visualisations help convert complex data sets into simpler visual formats that deliver new insights which even a layman can understand, thus making decision-making proactive and quick.
Collaboration between networks: Collaboration between suppliers and users can help create new opportunities and also manage improvements. Consider platforms that provide visibility to suppliers and buyers in all the elements of the procurement value chains. With this, procurement teams can use the supplier information available in the cloud, analyse supplier performance and identify, monitor and escalate risks.
Crowd sourcing holds fresh beginnings: Using the talent and capabilities of the crowd, their inputs and new ideas, especially through mobile tools and apps, can help businesses access new procurement centres. Procurement leaders can also access industry experts to leverage on their experience and subject matter expertise, and keep pace with trends and patterns that impact procurement and supply chain performance.
Peer-to-peer network of Blockchain: Blockchain technology can be the next big thing for procurement transformation projects. It can help make the best use of encrypted data and process the information in multiple databases in real time. Sample this: Automated payments can be triggered by using blockchain that depends on cryptology data which uses peer-to-peer network to create digital transaction ledgers which can act as evidence of digital transactions in the P2P process or any other process in the supply chain.
Digital 3D printing: 3D printing technology or additive manufacturing can help manufacture physical objects from a digital model by adding layers of materials. Though, it is only used for prototyping of goods currently, it has the potential to eliminate stocking activities for low-volume units which can be replaced with on-demand production. For direct materials, rapid prototyping will become an integral aspect of the strategic sourcing process.
Wearable sensors: These types of digital devices that can track and record physical data will be beneficial to track movement of the inventory for re-ordering purposes and will help in auditing as well.
Robotics to automate repetitive tasks: In procurement, Robotics Process Automation software could help recognise and record patterns that can perform rule-based tasks. In times to come, more and more robots will be used to perform multiple repetitive manual tasks, reduce errors and risks in execution as well as drive up procurement efficiency.
Spatial analytics and virtual reality: Through these technologies, procurement teams can detect movement of goods from one place to another easily. This can not only help in keeping track of the procurement activities but also conduct effective audits to find out the leakages and the areas that can be improvised. The application of multiple solutions and technologies can help the business enhance process efficiencies and grow exponentially. This makes it all the more necessary for procurement leaders to open up their businesses to these disruptive technologies.
Cyber tracking: Since much of the action takes place in the Internet of Things (IoT), it is necessary to leverage the real-time tracking of online or physical activities to be used for pro-active supplier behaviour and performance. In addition to third party data, many trends and patterns can emerge and help make practical predictions on the supply chain or supplier risks. This can help businesses find the pain-points and fix them in order to straighten up the process of procurement as a whole.