As the economy slowly recovers from the Covid-19 pandemic, businesses are still facing the challenge to keep up with their procurement and supply chain needs. Global matters like supply shortages are forcing companies to rethink their supplier relationships and look at advanced digital technologies to manage their future demand. A new study – Advanced Digital Solutions to Support Procurement and SCM 2021 – sheds light on today’s procurement and supply chain needs and illustrates how advanced digital technologies can help solve them.
Here, we discuss some study insights and have a look at what’s holding businesses back from digital advancement. We also explore which procurement measures can help build business resilience in the long run. Unite is an official partner of this e-procurement and SCM study. With its findings, we constantly evolve our B2B platform to connect the economy for sustainable business.
Transparency is a demand in today’s procurement landscape
The study brought to light some wants and needs for the future of procurement. More than 70% of respondents expressed a desire for transparency of global procurement markets. But when asked to what extent the participants had already implemented advanced digital technologies for the purpose of increased supplier transparency, the majority (55.8%) said they only had a “rough idea” so far. Only 6.6% were already using these types of technologies within their companies.
“Gaining transparency of global procurement markets is a great way for purchasing departments to make themselves indispensable,” said Prof. Dr Bogaschewsky, speaking on Unite's B2B-Radar podcast. “Sourcing effective, innovative, flexible and resilient suppliers benefits the business as a whole.” Bogaschewsky is the chairholder of business administration and industrial management at the University of Würzburg and the co-author of Advanced digital solutions to support procurement and SCM 2021.
Paradigm shift: starting from a wider supply base
With newfound transparency, purchasing departments are able to rethink their supplier selection. As the study suggests, companies understand that having a shortlist of good suppliers is no longer enough. Instead, the goal is to start with a longlist made up of high-performing suppliers that can meet their needs and compliance standards. This allows companies to consider suppliers they may not have even known before. Transparency can then help them narrow down their selection and result in a better supplier shortlist.
For decades, businesses tried to reduce their supply base so that they could look after existing suppliers properly,” said Bogaschewsky. “Now they’re realising that to find the right suppliers in the first place, they need much more supplier-related information. Then they can find the best suppliers for their needs.”
The global Covid-19 pandemic accelerated this paradigm shift. Extreme shortages demonstrated the need for independence from limited supplier shortlists. To that end, businesses have started challenging their entire supply base structure. The goal is to find more efficient systems and strategies to manage risks. Advanced digital solutions can be tremendously beneficial in this process. They run pre-analyses using artificial intelligence. This way, users can streamline supplier searches and gain a competitive edge.
Sustainable business is the way forward
When asked about the importance of environmentally relevant supplier information, more than 73% of those surveyed deemed it “important” or even “very important”. Similarly, social-ethical aspects are considered important or very important (67,1%).
The study results illustrate that companies and public sector institutions are looking at more sustainable supplier relationships, products and services, indicating that procurement and supply chain management are playing a key role in implementing sustainable business strategies in the future.
Digital solutions offer strategic value
Businesses can increase resilience by making use of smart platforms as well as SaaS providers that apply big data analytics and artificial intelligence (AI). CFOs and CEOs, in particular, should recognise that purchasing goes far beyond ordering and negotiating. It’s this so-called sustainable competitive advantage that makes a business successful in the long run. It also helps achieve independence from suppliers with geographical restrictions or incompatible compliance standards.
Almost 80% of respondents believe that advanced technologies would benefit their business by supporting strategic procurement tasks. So what’s holding them back? A lack of personnel resources and/or time are by far the main reason why these solutions are not implemented quickly enough, if at all. Insufficient expertise with regard to technologies is another barrier to entry. Only 6% of participants claim they have the expertise required to introduce and apply technologies in their business. Other reasons include a lack of budgets, management support and market transparency.
What can businesses do to rise to their procurement potential?
Fortunately, there’s a lot that businesses can do to use advanced digital solutions to improve their procurement and business strategies:
Long-term partnerships with suppliers
As businesses cope with the aftermath of the pandemic, a big takeaway is to ensure good supplier relationships for more resilience and risk reduction in the long run. “Those who maintain close, long-term partnerships with suppliers come out of a crisis in a better state than those who don’t. That’s because they still receive at least some level of supply during difficult times,” Bogaschewsky told the B2B-Radar.
Seeing the big picture: procurement as part of a holistic business strategy
It's crucial for businesses to realise that managing the worldwide supply chain is a holistic process. Frequently changing suppliers may seem more convenient in the short run. But corporations should avoid cherry-picking their suppliers. Instead, a holistic strategy is what’s going to help strike that balance between resilience and cost-efficiency.
Sustainable business based on advanced digital solutions
And this is exactly where advanced digital tools and platforms come into play. They offer a low barrier to entry because they can be implemented quickly and at a low cost. Plus, they help companies gain business-critical insights for more efficient procurement strategies. The better these technologies prove to be, the more likely purchasing departments are to get the resources they need to grow business potentials and competitiveness. Value creation starts at the very beginning. That’s why procurement needs to be an integral part of strategic decision-making.
This new study shows that businesses have realised the benefits of advanced digital tools and platforms to support procurement. But at the same time, there are budgetary, time and expertise constraints holding companies back from using these solutions to their full potential. Procurement is a piece of the value creation puzzle. Once companies realise this, they can invest in advanced technologies to get holistic insights and create effective strategies. Unite partnered up with the authors of this study with the goal of supporting buyers by improving our digital platform to live up to tomorrow’s standards.
About Advanced Digital Solutions to Support Procurement and SCM 2021
A total of 228 procurement and supply chain professionals participated in Advanced Digital Solutions to Support Procurement and SCM 2021. The study was conducted by Prof. Dr Ronald Bogaschewsky, University of Würzburg, Germany, and Prof. Dr. Holger Müller, Leipzig University of Applied Sciences, Germany. Supporting organisations and companies included apadua, archlet, Facturee, Unite, Mysupply, riskmethods and Scoutbee as well as the Federal Association of Materials Management, Purchasing and Logistics in Austria. The study participants are based in German-speaking countries and represent the following sectors: industry sector (61.8%), services sector (23.7%), public institutions (9.6%) and trade (4.8%).
About Unite
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