It's hardly surprising to point out an industry going digital in 2018. Harnessing the increasing speed and power of connected systems has been a preoccupation across sectors for years now. In the case of the supply chain, and procurement in particular, the real shock may be how much work companies still had to increase the IT presence in their operations. While old habits die hard in back-end processes, teams have recently reached a tipping point at which the potential advantages of digitization are too great to ignore.
Before 2018 began, there were many predictions about which ideas and technologies would be the the most prominent in the months ahead. Now, one quarter is complete, and it's time to consider how the year has been playing out for companies around the world.
Interest spikes and the market consolidates
Spend Matters recently reported that late 2017 and early 2018 have been busy times for the e-procurement market. Software companies have been eager to offer cloud-based solutions that target the nimble buyer persona, and supply chain teams have been interested in buying them. Organizations are interested in new tools that will give them intuitive access to e-procurement features, and they don't want to spend too much money.
The news provider did note that increasing diversity of software offerings hasn't been a universal trend. Some of the vendors behind e-procurement tools have been acquired by other providers, narrowing the field and pointing companies in the direction of a few leading offerings. The purchasing frenzy likely still has some time to go, which means software buyers should be ready for the possibility that the new e-procurement tool they buy today may be under a new marquee tomorrow.
The actual value of e-procurement can come from its ability to make departments more efficient than they could be without the technology. A recent American Productivity & Quality Center metric spotlight, published by Supply & Demand Chain Executive, revealed the potential gains that come from automating the nuts and bolts of purchase orders through the use of new and effective software.
APQC revealed that top-performing procurement groups process almost all of their purchase orders electronically, totaling 98 percent of these transactions. The correlation between declining amounts of automation and generally weaker performance continues on to median organizations, which have 80 percent of POs automated. For bottom-performing companies, only 55 percent of PO work is automated.
The use of e-procurement systems to reduce manual back-office work is especially important at large companies. APQC noted that the complexities of making purchases at large companies demands more time and effort by staff - as businesses become bigger, efficiency falls and the chance of error rises.
A digital year
Procurement departments that still have too many manual processes in place may find themselves unable to cope with the natural inefficiencies of such a system. This is where new software deployments come in. With a field of offerings that is both expanding and consolidating and great potential benefits there for the taking, 2018 promises to be an eventful year in the supply chain software buying space.