The digital transformation of companies is giving rise to new products, processes, and services. Along with this, information and resources need to be shared in ways that were not possible in the past. Building, maintaining, and managing relationships with other companies in the supply chain must be rethought. Supply chain managers are instrumental in this process. Part of their job is to identify new opportunities and find the appropriate partners to implement them.

Many reputable surveys show that corporate finance managers are prioritizing investments in digital education and skills in the areas of data analytics, artificial intelligence, and cloud. Purchasing departments are also benefiting from this. According to the PwC study “Global Digital Procurement Survey 2022”, digital transformation is now a top priority for companies. Half of procurement managers believe it will be a key focus in the next few years.

The benefits for procurement are clear: improved process quality and speed, better cost control and thus cost optimization, more transparency, for example in supply chain traceability, risk reduction and more time for strategic activities. The move toward more AI and IT in purchasing can also lead to attracting younger junior staff to the job.

What concrete relief does the digital transformation bring to the everyday work of purchasing experts? Here are three examples:

  • AI can provide valuable services in predictive analysis. It uses large volumes of data to make the most accurate forecasts possible for developments in supply chains. Until now, supply chains have tended to be characterized by little exchange of information between the individual sections. This silo formation makes central planning more difficult and complicated and prevents adequate rapid reactions to unforeseen changes. A forward-looking supply chain is maximally transparent. Thanks to automated processes, deviations are immediately detected by the system and purchasers can react accordingly.
  • How much time do you spend checking supplier documents such as order confirmations or invoices and comparing them with your purchase order? Most of these documents – around 60 to 80 percent for most companies – match the respective purchase order. The time spent on this can be largely saved thanks to support from intelligent systems.
  • An optimal warehouse strategy is a real challenge for many procurement managers. If the warehouse is underutilized, unnecessary costs are incurred; if stock levels are increased, the warehouse is too small. An interesting and increasingly popular solution is so-called on-demand warehousing. On-demand warehousing services identify unused industrial warehouse space and make it available to companies on short notice. On-demand warehousing services negotiate with multiple warehouses on behalf of their customers to build a nationwide fulfillment network, if necessary, to reduce shipping costs and make the fulfillment process more efficient. This gives them the ability to access warehousing services as needed without making a long-term commitment.

According to the PwC study mentioned above, only 36 percent of companies manage to successfully implement digital transformation. Often, changes are made without considering the teams involved and without thinking about how the changes will affect their tasks. Companies often underestimate that the focus in this change process is on the successful combination of people, processes, and technology. Therefore, managers need to convince their teams that technology is their ally, not their adversary. The new strategies should be discussed across departments before implementation because executives may not be aware of current processes or inefficiencies, while employees can provide valuable insight into how communication and data sharing between teams could be improved.

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