Technology is progressing at its highest rate ever. New software solutions are being released into the market every day. In contrast to the new technology, there is also more and more focus on emotional intelligence which means a greater focus on creating long-lasting trustworthy relationships with your business partners. All in a world where risk is at its highest levels, with fraudulent practices, data breaches, system hacks and unethical suppliers being the most common concerns.
Procurement is no exception to these new “trends”, and in order to keep delivering and bringing value to the business it has to get on board with new trends. Considering the pressure to evolve in order to succeed in a competitive world, it’s important that procurement organizations keep in mind their own strategic objectives.
Below are the three biggest challenges threatening the performance of procurement teams this year:
1. Getting the best value for money from procurement technology
We keep hearing more and more about digital transformation in procurement, and the importance of embracing procurement technology in order to stay ahead of the competition. While this is important and a step towards being more efficient, we believe there’s no one size fits all option when it comes to the right technology for your business. Companies need to take into account their own procurement strategy and how it fits into their business strategy.
Moreover, companies are facing different challenges, are at different stages of maturity, with different budgets.
Procurement technology is here to help you simplify your P2P processes as it demonstrates its value by allowing companies to reduce manual tasks and purchases made from non-preferred sources, with no visibility. There are multiple benefits to making use of procurement technology.
In this time and age, organizations need to decide which is the right technology for their business.
Say you already embraced invoice automation. But are you ready to incorporate artificial intelligence into your procurement operations? Do you have the right skill set? And, are your procurement processes complex enough to justify the investment?
AI can quickly solve a number of challenges faced by procurement today. AI powered software can help manage supply chain risk, it can help you get more in-depth information from your spend analysis and by making use of big data it can provide insights that help organizations reduce spend, simplify processes and ensure compliance.
2. Ensuring smooth and transparent collaboration with suppliers
Organizations depend on their suppliers and at some level suppliers can make or break the success of a business. Turning your supplier into a business partner and even into a competitive advantage takes time and effort, but the process will benefit both parties.
Supplier management is one of the biggest challenges faced by procurement teams. From identifying the right suppliers to keep track of their performance and ensuring a stable supply of quality products, the whole process is filled with complications. In addition to this, organizations should consider a supplier’s reputation and ethical behavior.
Having a number of preferred suppliers make things easier. These suppliers should be accustomed to your P2P processes, should help you get the best value for money, should be transparent about their own organization and processes and the relationship should be based on good communication.
3. Compliance and risk management
Managing risk and reducing its impact is still one of the most concerning aspects for CFOs. While organizations are working towards strengthening their supplier relationships the more dependent on its suppliers it becomes, the more likely that a disruption in supply anywhere along its supply chain can result in failure for the organization to meet its commitments.
In order to ensure compliance and effectively manage risk, organizations need to have a risk management strategy in place; ensuring awareness of potential risks but also putting in place standard procedures for each of these situations. This also means a shift in the organization’s culture, from crisis management to proactively working towards avoiding risk.
Monitoring risk and anticipating what events might occur to cause disruptions in your objectives becomes a part of everyday business and risk management becomes an integral part of your sourcing or supplier management programs.
To help with this, there are now modern technologies that protect organizations from risk. AI powered audit software can help your organization identify risks, from contract compliance irregularities to invoicing fraud and supplier behavior risk.
We live in challenging times, where it’s both difficult and exciting to do business. Because of technology there is both greater risk in the business world but also greater potential for success. Grasping on to the right technology at the right time, and getting your organization to evolve together with new technology will ensure that you keep up the momentum for a long time.
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