If we’ve learned anything from 2020, it is that we cannot predict the future. The COVID-19 pandemic significantly disrupted many supply chains, as businesses became dependent on procurement teams to help mitigate the impact by identifying and onboarding new suppliers in different regions.
However, a significant number of organisations have been hindered by a lack of procurement process digitalisation. New research found that 43% of UK businesses say that the rate of digitalisation within procurement is low, which is impacting agility and preventing businesses from minimising risk.
The importance of process digitalisation goes beyond navigating the immediate effects of COVID-19. Businesses that are reliant on manual processes are not only wasting and average of £1.94m per year in staffing costs, they are also preventing procurement teams from focusing on high value tasks. Savvy businesses have digitised procurement processes as a springboard to create a competitive advantage for themselves, as they can better identify new revenue opportunities, unlock innovation and improve profitability. Over the coming years, UK businesses need to move quickly to digitally transform procurement and ensure they are not left behind.
Procurement process digitalisation remains in the slow lane
As things stand, organisations still have a long way to go, with many failing to digitalise procurement processes. Just over half (55%) of UK businesses have digitalised invoice processing, while less than half have digitalised purchasing (42%) and budget management (33%). Businesses are even further behind in digitalising strategic processes such as spend analysis (32%) and risk management (26%). Clearly, there is significant room for improvement for organisations looking to make informed decisions, identify opportunities to create revenue, or collaborate with suppliers.
Worryingly, most businesses have not digitalised supplier onboarding or sourcing processes. Identifying and bringing on new suppliers is critical for businesses searching for new opportunities to collaborate and innovate or react to a potential disruption, so digitalising the process should be a top priority. This is particularly true in times of crisis, as one of the biggest challenges UK businesses faced in reducing the impact of COVID-19 was identifying alternate suppliers.
Procurement teams are prevented from adding value
This lack of procurement process digitalisation is creating frustration for UK businesses, and holding them back from adding value. Eight-in-ten (81%) UK businesses say a lack of digitalisation is preventing them from collaborating with suppliers and internal stakeholders, while a further 83% believe it is preventing them from innovating and executing on new revenue streams and opportunities. Without the ability to collaborate or execute on opportunities to drive new revenue streams, businesses stand little chance of getting ahead of the pack.
However, when it comes to digitalisation, UK businesses face a number of challenges. The most common obstacles to digital transformation for UK businesses were their suppliers, technology, and processes. Clearly, collaborating with suppliers is still tough. But, as supplier visibility continues to be vital to innovation and identifying revenue opportunities, it is not a problem that businesses can leave unsolved.
A smarter approach to eliminate manual processes
Most businesses understand and recognise that digitalising procurement will help them gain a competitive advantage. Furthermore, UK businesses recognise the importance of digitalisation beyond this, with one of the biggest benefits being reducing their environmental impact. Sustainability continues to become a key differentiator, allowing for greater efficiency and waste reduction, while turning being ‘green’ into a competitive advantage for eco-friendly businesses.
But to reap these benefits, it is clear a new approach is needed. Organisations need to adopt a smarter approach to procurement that can enable effective digital transformation, helping them to move away from managing processes over email, phone, or paper, to instead capturing everything digitally. This can free capacity for more strategic projects, improve access to insights for better decision-making and foster better collaboration by connecting internal stakeholders and suppliers. As a result, businesses are better able to identify opportunities to innovate, collaborate and grow revenues, giving them the chance to build better products and service offerings that will differentiate them from the competition.
Digitalising procurement to combat uncertain times
n today’s uncertain and evolving landscape, procurement has become a much more strategic part of every business, but a lack of digitalisation is holding teams back. To create a competitive advantage, businesses need to digitalise manual and strategic procurement processes to provide teams with the tools they need, and give them back time to focus on creating value for the business.
Making procurement smarter can create an all-encompassing digital view of procurement and supplier management. This is increasingly important for businesses looking to restore growth post-COVID and ensure resilience for the next crisis.