These decisions really need to involve the head of every department. Every department is affected by procurement even more than most realize. Generally, we see purchasing, finance, and technology as the key players making this decision, but we often find advocates in every part of the copany because good procurement truly helps the whole system run better.
EBN: By focusing on operational excellence, organizations can expect some key benefits. What are the main benefits organizations can expect? Are there any less obvious benefits that an organization might achieve?
Khan: One of the main benefits we look for are usability and productivity gains within an organization, not just with employees but with external trading partners and suppliers. Are employees spending less time on systems and processes for purchasing or more time? Business cases can only be realized if you have full participation from employees and if the system is not considered a chore. Technology is only one third of the classic “People, Process, and Technology” matrix and a platform must address all three components to be successful. I think another measure that often gets overlooked is the behavioral aspect of software utilization within an organization. Are employees generally happier working in Vroozi and is there a ‘stickiness’ factor that can be measured where employees and suppliers are consistently using the system? Transaction execution times will improve if this is the case.
EBN: How can organizations measure the benefits of investing in technology?
Khan: Naturally, any investment in technology should have a significant and tangible component of productivity gains and cost savings. For procurement, this is great because the savings are very quantifiable. Some of the key areas we focus on are:
- Contract compliance
- Supplier compliance
- Accounts payable (AP) error reduction & exceptions
- Electronic delivery of documents
- Cycle time improvements
- Supplier management
- Sourcing better pricing
EBN: How do you see the way that organizations are using technology to optimize the supply chain evolving? What’s the next frontier?
Khan: There are a few ways. The first is that as technology improves, it also becomes more accessible, especially in cost. There is now a huge trend where companies that would have never had access to expensive enterprise software that can now take advantage of the best procurement technology. For many of these companies this is the difference in very rudimentary Excel-based solutions to mobile-friendly, automated procurement. It is a real game-changer for many mid-size companies.
Of course, digitizing and going mobile is another huge trend in supply chain technology. Not only is mobile procurement an option now, but it is a safe, user-focused option that allows procurement to continue flowing even in a very mobile workforce.
As for the next frontier, artificial intelligence and predictive procurement with machine learning is an essential area for productivity gains. We will move from data collection and reaction to proactive resolution of exceptions and pushing of data with recommendations. For example, purchase orders and invoices can be electronically captured and any exceptions which occur in the lifecycle can be resolved through automation and decision trees.
— Hailey Lynne McKeefry, Editor in Chief, EBN