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Delivering value-led procurement and supply chain digital transformations

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Digital technology is a hot topic across most firms - more are hoping to digitise operations, but find it difficult to navigate rapidly emerging technologies.

Digital technology is a hot topic across most organisations. More and more organisations are hoping to digitise their operations, but find it difficult to navigate rapidly emerging technologies such as advanced analytics, AI/robotics, control towers and blockchain.

Despite the potential upside of digital transformation, making significant change comes with real risks. A recent report showed that as many as 90% of digital transformations fail1. This typically happens for three reasons:

  1. Poor roadmap development – focusing on flashy technologies rather than on payback
  2. Data issues – delaying the transformation for the perfect dataset
  3. People issues – lack of alignment, ownership and organisational capability

Organisations must identify solutions to address these challenges prior to embarking on any digital transformation journey.

 

1.  Developing the right roadmap

The maturity level of the procurement organisation should drive digital decisions. Rather than starting with the technological promise, the solution needs to originate from and be grounded in strategy and commercial reality. Digital tools should be deployed based on real business needs and prioritised based on value.

For example, organisations at the start of their procurement maturity journeys require basic controls and disciplines to capture the best price outcomes. To achieve this, digitisation efforts could focus on capturing and tracking savings by establishing KPI reporting tools, intelligent spend analysis, basic eSourcing platforms and inventory optimisation software.

As organisations move up the maturity curve, they can embark on more advanced digital transformations.  These usually involve driving automation and process efficiency, as well as increasing collaboration between stakeholders. Examples include integrating source to contract and procure to pay processes, improving visibility of supply chains through control towers and increasing the use of automation in warehouses.

Regardless of how mature your organisation is, it is important to choose tools that drive value across the entire supply chain – and not just introduce a technology for technology’s sake.

 

2.  Getting to the right dataset

Data issues can make or break the success of a digital transformation. Organisations often feel crippled by the quality or lack of data – and spend significant resources and time to correct issues, or build a ‘perfect’ data lake. By instead adopting a more pragmatic approach to data preparation – focussing “on the money” rather than perfecting their data upfront - organisations can reap significant benefits.

Some tips include:

  • Don’t start with everything – resist the temptation to build a complete data warehouse or lake upfront
  • Go direct – start with the business need, then the data required for this, and then the most direct technical handling solution
  • Don’t reinvent the wheel – existing databases and reporting infrastructures don’t always need to be duplicated
  • Build alignment – keep the business owner and technology teams aligned to ensure business requirements are captured and issues addressed

 

3.  Making digital work for you

Delivering measurable and sustainable bottom line results with a digital implementation requires more than a new ‘shiny toy’. To make digital work, significant capability building is needed to actually deliver results. This includes:

  1. Building alignment and ownership of the transformation to drive pace, uptake and sustainability
  2. Setting up the right organisational “wiring” (ways of working) including changing policies, processes and job descriptions to hard wire in a focus on results from day one
  3. Investing in upskilling and coaching the organisation to ensure that digital changes work and is sustained

Given the dynamic and high-pressured landscape of procurement and supply chain, digital transformations are becoming a necessity for organisations. It is critical to take the right steps upfront to ensure your transformation journey delivers the results it promises.

 


[1] Digital Journal - 9 out of 10 digital transformation projects will fail: link

 

About the authors

Karen Wong