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blog December 13th, 2021 4 priorities every CPO needs to win the digital transformation race (and one successful case)
Thomas Teichmann
Thomas Teichmann

When SCALUE started, procurement wasn’t high up in the digital transformation priority. Fast-forward to 2020, a year where a global pandemic tested the resilience of many businesses — and digital transformation was vital in determining their success.

Up to this day, procurement processes remain manual in many businesses, regardless of their size. However, digital transformation is the path ahead if companies want to save money and time, optimizing processes to react and make decisions faster. By taking these initiatives, companies can respond better to supply chain adversities.

Although another pandemic might not happen so soon (knock on wood!), other challenges might test the efficiency and reaction-time of CPOs whose procurement process still relies on physical meetings and Excel sheets. Supply bottlenecks can happen unexpectedly. Recent examples include:

  • The fire accident at Renesas, one of the car industry’s biggest computer chip suppliers, generated a shortage that impacted Volkwagen’s production (and shares).

  • The Suez Canal 6-day obstruction by the Ever Given, a 400-meter-long container ship. For every day it took to clear the blockage, 9 billion dollars worth of goods were estimated to be disrupted.

  • The impact of Brexit on immigration, leading to an absence of foreign workers and, consequently, truck drivers — which in return led to shortages of fuel across the country.

However, external influences are not the only reason supply bottlenecks happen.

Not keeping up with digital transformation can also generate an internal supply bottleneck since CPOs can’t cope with the amount of work to process manually. The backlogged to-do list causes more delays and blocks any CPO’s ability to fast decision-making.

Digital transformation, then, represents a competitive business advantage and a way to better prepare for unexpected events while remaining agile within the team.

What should CPOs prioritize if they want to stay ahead in procurement digitalization?

Even though successful CPOs are pro in tackling complexities, technology can give them (and their team) a welcome helping hand. What are the main issues they need to prioritize, backed up by Deloitte’s Global 2021 Chief Procurement Officer Survey?

  • Invest in strategy and transformation: CPOs close deals, try and save money, manage contracts, and assure compliance (among other tasks). While these activities usually that 74% of their time, high-performing CPOs spend 15% less time on them! That’s because investing their precious time in strategy and transformation leads to faster decision-making.

  • Foster an agile mindset: CPOs who want to move quickly should have a look at design thinking. In procurement, being agile means failing faster (but on a smaller scale!), which allows them to deliver solutions faster, too.

  • Get digital (but high-quality digital!): poor quality data, lack of funding, and poor integration are the main challenges that CPOs have to face when trying to implement tech solutions in procurement. Here, it is not enough to automate Excel sheets. To fully take advantage of digital solutions, CPOs need to focus on data quality and independence from IT partners to drive more efficiency and savings digitally.

  • Invest in ground-breaking tech: the critical enabler for success? Advanced digital solutions in procurement, like SCALUE. Deloitte’s research shows that high-performing CPOs are 4–5 times more likely to use advanced analytics/visualization and 18x more likely to have fully deployed AI/cognitive capabilities.

Unpredictable supply risks can affect every company out there, but CPOs equipped with an “intelligent” supply chain can face them faster. As the points above summarize, that means to count on automation and advanced procurement software as the essential foundation for strategic procurement processes.

One example: the German utility company Gelsenwasser AG.

Gelsenwasser: Digital transformation in procurement with SCALUE

Before SCALUE, the water and energy supply company (with a turnover of 1.7 billion euros in 2020) was operating with an ERP system SAP R/3 and analyzing Excel sheets. They also produced a full report of expenditure across all commodity groups once a year.

A very time-consuming process that was prone to errors given its many individual steps.

  • Their biggest challenge in procurement? Lack of transparency with their annual report.

“The analysis capabilities of SCALUE go far beyond the ones provided by SAP R/3 in the standard”, says Christoph Stephan, strategic procurement specialist at Gelsenwasser. “They give us more transparency in our spend analysis.”

Digital transformation is more than buzzwords: they are a vital requirement for companies to thrive.

Procurement and supply chain solutions shouldn’t be forgotten while the transformation rolls on: CPOs that take the time to invest in tech solutions will be rewarded with more efficiency, transparency, and savings — just like Gelsenwasser.

Luckily, now their analyses can be done and visualized with the push of a button, recognizing and reacting to changes in their procurement portfolio more quickly. With SCALUE, Gelsenwasser got that and:

  • Dynamic displays,
  • Ready-made management dashboards,
  • Faster ROI,
  • Monetary and time savings
  • Better preparation for negotiations

Read the full article at medium.com

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