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As the technology that helps improve and streamline the procurement process, digital procurement tools help organizations make better purchasing decisions, gain efficiencies, automate repetitive tasks and reduce costs. E-procurement platforms provide a centralized “hub” for organizations to source, bid on and award contracts, for example, while supplier relationship management (SRM) systems help organizations track supplier performance, manage contracts and resolve disputes.
Other digital procurement solutions include procurement analytics tools that track spending, benchmark performance and identify trends, and software that helps improve collaboration between procurement and other organizational departments.
Implementing these digital procurement tools has become a top priority for manufacturers and retailers in the aftermath of the COVID-19 pandemic. And while the supply chain turmoil that many companies grappled with over the last few years may be fading, a new study from PYMNTS and Corcentric reveals companies’ overall willingness to invest in more digital procurement tools as a future-proofing strategy.
CFOs Speak Up
For their Digital Payments: Modernizing Procurement Processes report, the companies surveyed global CFOs about the investments they’re making (or plan to make) in their procurement, accounts payable, accounts receivable and fraud prevention systems (among others). The survey also examined the evolution of companies’ investment decisions over the last three years.
“Businesses everywhere experienced a crash course in the importance of supply chains during the pandemic’s early months,” the report states. “The key lesson was the need for resilient systems capable of mitigating the havoc caused when supply chains are disrupted, or worse, broken. The industries most dependent on raw materials and hard goods to get their products into customers’ hands, particularly manufacturers and retailers, felt this disruption more than most.”
In response, businesses have been upping their investments in digital payments technology, with the companies that felt the pain of the supply chain breakdown most acutely being “the most aggressive in upgrading their procurement systems,” the companies point out. “These businesses expect their investments to pay off by ensuring that these systems improve the efficiency of their processes for purchasing goods and services during normal business conditions and enabling quicker responses to future disruptions.”
Making the Investment
Here are some of the other key findings from the report:
- Both retail and manufacturing companies are investing in digital technology to improve procurement operations and limit business disruptions caused by future supply chain breakdowns.
- Among manufacturers, 42% are already investing in upgrades to their procurement technology, with another 44% planning to make investments in this area.
- Healthcare companies have been concerned about the costs of replacing their older systems and just 15% of them are currently investing in procurement solutions, but this appears to be changing. Forty-five percent of healthcare companies are planning to invest in digital technology for their procurement systems.
- Companies investing in digital technology to support procurement operations are doing so primarily to modernize operations, expand business and reduce costs. For example, 59% of manufacturers say the most important reason why they are investing in digital procurement technology is to modernize their business processes.
- 18% of manufacturers all say that reducing costs is the most important reason for their investment in digital procurement technology.
A Focus on Supplier Data
According to the study, 39% of manufacturers that are investing to improve their procurement systems are spending to upgrade their systems for supplier data. Similarly, 12% of healthcare companies and 13% of finance and insurance businesses that are investing in their procurement systems are also spending on improvements to their supplier data systems.
“Many are focused on improving the functions for supplier data — such as real-time inventory information and supply chain analytics — which may be the result of lessons businesses learned during the pandemic’s early months, when supply chains stopped operating efficiently,” the report notes. “These supplier data systems can help businesses improve their planning and forecasting while also giving them the ability to manage even broaden supply chains when they need to meet a surge in customer demand or find alternative suppliers when shortages occur.”
