Digital transformation is coming for nearly every industry in the world, and the past few years have only expedited that. The pandemic forced most industries to adapt to an increasingly virtual world and migrate their processes to digital solutions. According to Forbes, 97% of executives say that the COVID-19 pandemic sped up their digital transformation. Even as we move away from the pandemic’s peak, the focus on digital transformation lingers. But the digital transformation in procurement processes is essential for maximum growth.
For procurement teams managing a significant supply chain, this pivot toward a digital transformation presents a lot of opportunity. The procurement process requires substantial collaboration, large amounts of data, and stringent organization. Many enterprises have tried to handle this aspect of their business manually. However, leaning into a digital transformation strategy can provide significantly better results.
Digital transformation in the procurement process means implementing solutions that will migrate significant aspects of this process to software solutions. With digital procurement platforms, enterprises have centralized software that allows them to pay vendors, monitor data, onboard new suppliers, and more. This solution transforms how AP and procurement teams manage suppliers, ensuring simplified processes that reduce manual labor.
Digital transformation can be intimidating for enterprises, as shifting longstanding processes presents a major change. Digital transformation is a valuable change that guides procurement teams toward the future of supplier management. Below, we’ll explore the downsides of manual procurement, the benefits of a digital transformation process, and misconceptions about digital transformation in procurement.
Manual procurement processes have been slowly phased out from most businesses because there is simply too much margin for error. This approach relies on human data entry and bureaucracy. As a result, it can cause serious downsides for enterprises that aren’t willing to fully implement digital solutions. While the vast majority of enterprises do not use manual procurement processes for most of their business, some organizations have yet to fully develop their digital procurement processes and invest in transformation. This can yield long-term negative results.
Manual procurement processes are often heavily decentralized, relying on a paper trail and a bureaucratic system that requires input from many different sources. This often leads to substantial disorganization, where information can easily be missed and data lost. Losing data can lead to financial mismanagement and a missed opportunity to benefit from the substantial positives business intelligence brings.
Most significantly, manual processes are hugely time-consuming and expensive. They require significant time commitments from your core team to do things that could be done almost instantly with digital systems. Employees must filter through paperwork, track signatures, contact external shareholders, and more. Accounts payable teams frequently face confusion and bottlenecks when approving invoices. This results in wasted time and money, as teams spend excessive time on simple processes instead of focusing elsewhere.
Overall, manual processes are slower, more costly, and less organized. Businesses relying on manual procurement processes need a clear shift towards top-down digitization for a leaner, faster, and more efficient operation.
Across the supply chain, companies are leaning into technology like never before. According to the 2022-23 CEO and Business Executive Survey by Gartner, which interviewed C-suite leaders in industries reliant on utilizing global supply chains, technology was the second-biggest business priority for leaders, behind only growth. So why do so many organizations emphasize digital transformation as a key part of their future? It is because there are clear business benefits that can lead to a higher-functioning organization and smoother supply chain management.
Implementing digital solutions allows enterprises to centralize their supplier management and payments into a single source. This reduces the need for a manual system that is overcomplicated and time-consuming. The right solution enables enterprises to streamline their tech stack, utilizing a single software for multiple functions. This makes it easier to access data and reduces the risk of financial leakage.
Digital transformation processes also help enterprises move toward a future where new technology only makes their job easier. Procurement processes are increasingly virtual, and the industry is being reshaped by technologies such as blockchain and artificial intelligence. Gartner projected in 2020 that 50% of traditional spend analysis and procurement systems would be replaced with AI-driven purchasing software by the end of 2022, according to ProcureCon East. Implementing digital solutions positions enterprises to be prepared for the next wave of innovation.
Digital transformation prioritization is helping enterprises save both time and resources while centralizing their procurement processes. Recent industry changes have been significant, and the importance and benefits of these technologies are poised to increase further.
While leading organizations have shifted their procurement processes to virtual platforms, not everyone is aware of the significant upsides of digitization. Many enterprises still hold misconceptions about digital transformation that don’t align with reality.
A popular misconception about digitizing procurement processes is that it is too expensive and can cause many added problems for businesses. This is the exact opposite of the truth. Digitizing procurement saves enterprises money by freeing up time and resources, centralizing data, and addressing risks and financial leakage more efficiently. Imperfect initial technology adoption can still effectively solve substantial issues and surpass manual procurement processes for businesses.
Another misconception is that it is incredibly time-consuming to digitally transform procurement processes. It is much more time-consuming not to move procurement processes to digital solutions. Manual procurement processes are not time-effective, and digital procurement solutions reduce the time enterprises need to spend. Onboarding these tools may take time, especially for organizations relying on manual procurement. However, the long-term time savings are substantial.
For enterprises with many vendors and suppliers, it can become incredibly difficult to oversee operations without the right tools. That is what makes supplier data so important. Accurate, up-to-date payment data is essential for AP teams, empowering enterprises to make decisions for long-term growth. This is why, according to The Hackett Group’s 2021 Key Issues study on the procurement industry, 74% of organizations report having a current initiative underway to enhance and develop data and analytic capabilities.
Manual procurement processes hinder data collection and analysis, limiting enterprises’ ability to leverage business intelligence. A digital solution provides organizations with a centralized platform for payment and invoicing, consolidating their information in one place. An automated centralized master data source enables businesses to leverage the power of analytics by providing a unified and accurate data source.
Clean data from a digital solution enables a transparent and efficient enterprise with easily accessible information. It ensures that teams have the analytics available to them to make important decisions and that there isn’t financial leakage that goes unnoticed.
For enterprises seeking to embark on their digital transformation journey or expand upon it, Bedrock is an innovative platform that helps AP and procurement teams handle various aspects of their business. Bedrock is equipped with several tools to help with everything from invoice payments and money recovery to supplier onboarding and risk mitigation. With unified data features that give enterprises a central source of truth, Bedrock can ensure there is no financial oversight, that there is up-to-the-minute verified data, and that enterprises don’t make risky financial decisions.
Bedrock enables enterprises to move away from time-consuming, financially inefficient manual procurement processes prone to human error. With a suite of high-value features powered by AI technology, enterprises can automate key areas and free up time and resources for their teams. Digital transformation has been significantly expedited in the past several years, and with Bedrock, businesses can embrace these changes head-on.