Top Five Emerging Trends in Procurement

Written by Fay Khoo Yock Fan, MSIPMM

by Fay Khoo, MSIPMM

Top Five Emerging Trends in Procurement

Written by Fay Khoo Yock Fan, MSIPMM

by Fay Khoo, MSIPMM

by Fay Khoo, MSIPMM

Technology is now the largest change agent and driving force in today’s society and digital connectivity world. Most organizations deploy several forms of core procurement technologies. These platforms usually include a combination of spend analytics, e-Sourcing, contract management, eProcurement and e-wallet (e-Catalogs, e-Invoicing).

These solutions are the pillars of procurement for many organizations and will remain relevant for the foreseeable future. All of them have the same goal of delivering more long term savings. International procurement refers to the use of global resources, in the world to find suppliers, looking for the best quality, reasonably priced products (goods and services). The rise in wealth in emerging markets is overwhelming, and it will be a powerful force in shaping the new technology to come. Here are five areas in Emerging trends in procurement that will be affected by the forces of emerging markets.

#Top 1 – Adopting Automated Procurement

The traditional digital procurement system is designed in a one-size-fits-all manner. However, as the volume increases exponentially, the complexity of the demand for each business and supplier is increased, thus the need to customize the product from these systems.

Automated technologies such as source-to-settle processes, procure-to-pay, e-procurement, and digital contract management limit the need for constant human intervention through automated sourcing, procuring, and invoicing processes. With savings in time, even non-procurement professionals can handle the process, and help procurement professionals utilize their time in procurement strategy making. Requisition approvals, automated MRO re-orders, supplier profile maintenance, and purchase-to-pay (P2P) are among the most automated processes in digital procurement.

– Efficiency: This is one of the most obvious advantages of procurement process automation. Otherwise the repetitive tasks that need to be done by the person can be done automatically to make more time for the employee to work more complicated.

– Control: Purchasing software significantly increases the visibility of each part of the process. It is much easier to identify problems such as high cost and waste. In addition, instant access analysis can quickly respond to problems and unexpected setbacks and determine the best action plan.

– Communication and collaboration: Each department in the organization has a certain relationship with the procurement. The automation software makes it easier to generate reports and share information with other parts of the company and receive input. This improves transparency and allows better and smarter decisions throughout the company.

– Speed: Automation can also speed up purchasing speed. It can reduce the purchase order cycle by up to five days, the supplier two days ahead of schedule. This makes it easier to get important equipment to avoid out of stock

Flow Chart of a Procure to Pay Cycle

The diagram above shows the Flow Chart of a Procure to Pay Cycle (Extracted from www.ramco.com, 2017)

#Top 2 – Big Data Becomes a Bigger Part

In recent years, Bid data is driving more predictive analysis and forecasting. Predictive analysis provides the ability to predict the outcome of a particular action or market movement in a highly accurate way.

Large data will become a larger part of the procurement, help to promote procurement decisions, form a process, and select the right procurement solution. Procurement no longer requires someone to bang their fists on the table and demand a better deal from suppliers Procurement can now be founded on intelligent forecasting, understanding the market trends and knowing when is the right time to take risks and seize opportunities.

In addition, large data and artificial intelligence will work together to change the speed and overall efficiency of the supply chain and procurement processes. Using machine learning algorithms combined with large data will save time and money for the company. Applications such as vendor evaluation, spend analytics, and demand forecasting are some of the most popular applications to use data analytics in procurement.

#Top 3 – Using E-Wallets to make Payments

Mobile telephony has become an important part of the daily lives of many emerging market consumers, and payment on mobile devices has become the norm.

Consumers use mobile payment systems in these markets far beyond the adoption of similar systems in Europe, North America and china. Most consumers in emerging markets have better access to mobile devices than to banks and financial institutions, so mobile payments make up for this gap.

The Advantages of using E-Wallets

Traditional digital procurement systems were designed with a one-size-fits-all mindset. But with exponential growth in transaction volume and increasing need complexity of each business and suppliers, they demand customized offerings out of these systems. For process efficiency and optimization, large organizations are shifting towards developing their own:

– Safe and secure-All of your account information is encrypted, You will need to enter a password for all the transition process .Once lose your phone, the e-wallet password will be locked.

– Fast -Once a payment has been made, the transaction is automatically recorded for later viewing.

– Easy to connect to other accounts and using an e-wallet is the flexibility to make payments from different accounts.

Digital wallet for payments

The diagram above shows the various ways of using digital wallet for payments.

#Top 4 – AI Helps Procurement Solve Big Challenges

Artificial Intelligence (or AI) can quickly help solve some of the major difficulties faced by the whole industry. It can identify recently developed markets, manage supply chain risks, track exchange rate volatility and even find the ideal value without the quality being affected.

Making use of big data is another area for the purchasing executives to be concerned about. Artificial intelligence can be accomplished by spending analysis software, which has helped the purchasing department to determine their savings.

#Top 5 – Collaboration and Cooperation

Collaboration and cooperation between the company and its suppliers will improve or create procurement services and other services, shifting the focus to value, quality and teamwork. Collaboration is a great way for companies to get the best value, and core purchasing skills are still valuable, but they apply to processes and technologies.

Specialised Skills for Purchasing Professionals

Core Purchasing skill is important and global experiences are necessary even for companies with primarily domestic end market focus. The ability to quickly learn, apply and leverage technical knowledge for direct materials, indirect and internal process. Transferable relationships with suppliers where category more directly. Transferable relationships with suppliers where category more directly. The various specialised courses at SIPMM Academy equip purchasing professionals with the essential skills and techniques on purchasing and procurement in the global marketplace.

Conclusion

Drive simplicity and automation that can help procurement create advantage for their organizations today. The future of procurement is all about intelligence. Cognitive technologies are the key to unlocking its potential.

Investing in predictive, automatic, and secure technologies can operate with complex and fragmented data, leverage supplier data, and provide accessible analytics on multiple devices. Digitization can help procurement gain handle on advanced vendor-managed inventory processes.


References:

Clinton, Nancy (2016) Artificial Intelligence can help Procurement solve some of big challenges. Retrieved from: https://spendmatters.com/uk/artificial-intelligence-help-businesses-save-thousands, accessed 10/09/2017.

Maida, Jesse (2017) “SpendEdge Announces 9 Ways Procurement Automation Helps Businesses”. Retrieved from: http://www.businesswire.com, accessed 10/09/2017)

Robin Sand Hu (2016) 5 Emerging Market Technology Trends to Watch. Retrieved from https://www.lifewire.com/tech-trends-to-watch, accessed 10/09/2017.

Spendege (2017) Top 10 Procurement Trends in 2017. Retrieved from: https://www.spendedge.com/blogs/top-10-procurement-trends-2017, accessed 10/09/2017.

About the Author:

Fay Khoo has substantive years of experiences in the field of procurement, and especially in the oil and gas industry. She is a qualified member of the Singapore Institute of Purchasing and Materials Management (MSIPMM).

Fay holds a Diploma in Procurement and Supply Management (DPSM) and she is a candidate for the Graduate Diploma in Procurement Management (GDPM) at SIPMM Academy.

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