What The Future Of Procurement Transformation And Spend Management Look Like For Businesses

Procurement has been undergoing massive changes over the last few years, especially with the rise of challenging business models. It cannot be denied, however, that procurement is one of the last functions to undergo digital transformation.

A quick assessment will reveal that there are organisations and governments today that are still using outdated processes and technologies, which have caused shortages of consumer goods, record price increases, and inflation around the world.

With the systemic problems that are emerging in global commerce, several variables have contributed to the current economic climate. Regardless of their origins, contemporary businesses and governments are understanding that a digital procurement transformation is no longer an option, but is instead a requirement.

To embrace this, businesses must look to the future of digital procurement transformation and effective business spend management, and the strategies they must adapt to remain relevant.

Decision-making driven by accurate data usage

The case for accurate data cannot be overstated. Procurement organisations, however, are still battling with poor data usage and management.

Since procurement does not see the same level of scrutiny that other business functions do, it creates an environment where unnecessary costs can be incurred due to poor data management systems.

With digital transformation, businesses can foster better data usage, eliminate wastage of costs, and make smarter business decisions.

Diversifying and sourcing from local suppliers

Procurement teams are often trapped during challenging times due to the limited number of suppliers that they work with.

Through the diversification of suppliers and supply chains, businesses can work with dependable suppliers and mitigate the impacts of future shortages in goods and services.

By creating these relationships with local suppliers, businesses also have the advantage of forming strategic partnerships and further minimising any risks that may occur if the centre of operations is farther away from suppliers.

Focusing on environmental, social, and corporate governance (ESG)

Today, the global consumer base is dominated by the younger generation and most organisations understand that it is this demography that they cater to.

This generation places an emphasis on environmental and social responsibility and is keen to know that the goods and services they purchase are leaving little to no impact on the environment.

Procurement teams can focus on this aspect and evolve their systems and processes to become strategic and generate more revenue.

Switching to ESG-friendly sourcing practices is perhaps one of the best steps that can elevate an organisation’s procurement function to a future-ready model that can meet the requirements of its younger stakeholders.

Improving communication and collaboration

The right procurement solutions can offer clarity to most, if not all, shortcomings in the supply chain, which, in turn, leads to improved communication, collaboration across functions, and enhanced transparency.

When procurement functions can integrate with the business’s overall IT infrastructure where source data is accessible to all teams, this opens the door to creating some of the best procurement solutions.

Especially with the growing trend of employees working from remote locations, digital solutions can provide a bridge where cross-functional teams can collaborate.

Automating project management and project expenditure

One of digital procurement transformation’s biggest future trends is cloud-based procurement and spend management solutions that can automate manual processes.

Cloud-based procurement allows teams to obtain significant data, increase productivity, generate insights, and reduce spending.

Global challenges require a renewed focus on digital procurement transformation

With procurement taking on a more strategic role in business, the evolution of the procurement function is always underway.

With many transformative efforts taking place, the procurement and business spend management space will see massive changes in the future, and organisations that are not at the forefront of this digital transformation will quickly find themselves falling behind.

Businesses must start thinking of procurement as a strategic business partner rather than one function among many, making the here and now the most opportune time to start your procurement transformation.