New research from Ivalua has found that lack of digitisation is curbing AI adoption and preventing a strategic focus, leading to procurement teams wasting 22% of their time dealing with paper-based or manual processes.
The study reveals that more than half (53%) of procurement and supplier management processes have yet to be digitised, which is inevitably causing inefficiencies.
Half of the procurement leaders who were surveyed think that the rate of digitisation within procurement is too slow, while 47% say existing procurement systems are not flexible enough to keep up with constant change and deal with market and economic uncertainty.
Inevitably, this is having a major impact on procurement’s ability to work on strategic tasks. According to respondents, a lack of digitisation limits an organisations’ ability to make quick, informed decisions regarding their suppliers (47%), prevents organisations from tackling rising inflation and spiralling costs (46%), and makes it almost impossible to attract and retain the best talent (41%).
“Organisations are wasting millions in staff time every year on manual processes. This is bogging teams down in low-value tasks, limiting their ability to focus on more strategic priorities,” said Alex Saric, smart procurement expert at Ivalua.
“Given inflation remains high and the economic outlook uncertain, it’s never been more important to digitise procurement processes, and free up teams to tackle these challenges.”
Ivalua suggests that procurement needs a solid data foundation to harness AI and emerging technologies, with the study revealing that 85% of organisations have implemented or plan to implement data analytics within the procurement and supplier management function, while a further 63% say they have already implemented or plan to implement AI or machine learning technology.
Meanwhile, just 30% of respondents say they are “very confident” in the quality and accessibility of their supplier data when it comes to supporting effective procurement.
Other areas organisations have implemented or plan to implement to transform their procurement and supplier management function include full end-to-end Source-to-Pay platforms (72%) which can help to better manage their spend and suppliers, and chatbots (63%) which can help users make more informed purchasing decisions.
Additional areas include blockchain technology (56%) which can improve provenance when purchasing goods, plus Robotic Process Automation (RPA) (55%) which can reduce reporting time and assist with contract and category management.
Concluding the research report, Saric said: “AI can be the catalyst for procurement transformation, with clear use cases for processing data, driving automation, creating actionable insights, and informing strategies to augment procurement and supply chain operations.
“But poor-quality data will limit the insights produced by AI. Organisations need to walk before they can run, and this starts with digitisation. This means taking a cloud-based approach to procurement that builds a solid data foundation that will inform decision making and reduce the risk of ‘garbage in, garbage out’.”
The survey was conducted by Sapio research in July 2023 on behalf of Ivalua and is based on the responses of 850 procurement leaders in the UK, US, Germany, France, Sweden, Netherlands and Italy.
This begs the question for ANZ procurement leaders: how much time are YOU wasting? Could your processes be more efficient with digitisation?
