Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Digital Procurement 2024: Accelerate Sourcing with Our Guide

Key takeaways

  • Digital procurement refers to the modern way of acquiring goods and services your business needs using the latest technology.
  • Careful planning and consideration of supplier capabilities are necessary for successful digital procurement.
  • Effective spending control and purchase simplification are the benefits of digital procurement.

Whatis Digital Procurement?

Digital procurement is associated with the implementation of new technology in procurement. But, there is more to that. It implements automation tools and artificial intelligence (AI).

It also applies data-driven optimization and advanced data analysis to help the development of strategies in the company. Digital procurement changes the way tasks are done. It uses automation in doing tasks to reduce costs while not harming the efficiency of the work.

Digital procurement implements smart ways to analyze data models to understand and make the right decisions to operate. It enables strategic sourcing to be predictable by implementing new technology in its system.

Businesses utilize digital procurement as it helps them reduce the use of spreadsheets and email threads. Furthermore, it embraces automation and the integration of new technologies to streamline the procurement process.

Componentsof Digital Procurement Strategy

1. Data

Digital Procurement uses technology to further its processes. The first thing that is needed for that is data. Data is inherent in digitalization and technology. It is the main reason why we have functional technology and the key point for digital procurement.

The data enables the company to determine the needs of people and what goods or services are suited to that particular need. It gives the company the right way to select its suppliers and the right payment for them.

The data in digital procurement falls into two categories. The first one is profiling which helps the company to know the profiles of who they are negotiating. The second one is to discover the connection between two subjects to effectively grasp their true nature.

2. The Right Application of Technology

The technology is the machine that interprets the data. It is what makes raw data useful in a company. Combining the collected data and technology can automate the activities and processes in a company efficiently.

Utilizing the right technology will make an effective process that helps your digital procurement strategy. It is also less prone to human errors as it focuses on automation.

It is important to know what technology is to be applied to a certain process. Because each process has a different form and utilizing what is suited for that will make it run smoothly.

3. Compelling User Experience

The user experience of the stakeholders must be compelling. It must attract them to use the procurement tools. In using the procurement tools, it must be easy for them to use so that there can be an effective transaction.

It will be easy for them to navigate if the user experience is user-friendly. The interface will look cleaner if the messy stuff is in the background which is unnoticeable.

4. Policies and Procedures

Knowing the policies and procedures will make the collaboration in the company efficient. The process of digital procurement will be effective if the employees know their roles and responsibilities. It is easier to delegate tasks if you know who is assigned for that certain job.

The policies and procedures will give insights to the stakeholders about their duties and responsibilities in the company.

5. Talented and Skilled Individuals

Digital procurement does not end just by using data and technology. The backbone of this all is a skilled and talented individual who had strategized in making digital procurement.

You must take note of the data scientists and AI experts who have exerted effort in applying models to interpret the data. In addition, IT professionals have also contributed to this by integrating software applications that will help digital procurement.

Designers who have made the interface intuitive for the user must also be commended. Without these talented individuals, the digital procurement strategy will not be effective.

The Needfor Digital Procurement

Nowadays, we live in a society where almost everything moves faster. The manual labor, movement, and doing of tasks are a thing of the past. Of course, not all are being automated or digitalized. But, digitalization creates new channels for business partners and customers to communicate and negotiate. It opens a new idea of dynamics within and outside industries.

Business owners know that in order to thrive in their field, they must move fast and efficiently. That is why many businesses have embraced digitalization to develop new ways of improving their operation.

Digital procurement creates interaction with the buyers, suppliers, and third parties that will produce new ways of collaboration. It transforms the overall operation of a business.

Digital procurement starts with digital transformation. Businesses must invest in digital technologies to further their development.

How to ImplementDigital Procurement?

Going digital in procurement is important to thrive in the existing business landscape, but making a plan for it can be hard. Here are the steps on how you can implement it:

1. Collect Inside and Outside Information

To shape your digital procurement plan, it’s smart to check future trends in procurement. By doing this, you can make sure your plan won’t be outdated when it’s done.

Additionally, you can explore all the options, and see how trends are affecting the market, suppliers, experts in procurement, and your own company before you start planning.

Try to look at which systems and solutions are becoming more popular and what features they offer. Ask yourself, your seniors, and your teams why you’re doing this transformation.

Do you want more automation? Is accuracy the main issue? What problems do you want to solve with digital procurement? Answering these questions will help you plan for success.

2. Visualize the Future

Here, you will think about how your procurement process will work in the next few years and how your digital procurement plan fits in. Talk to your procurement managers and discuss how you want procurement to work in the future. Once you know how your plan should work, think about the technology you’ll need.

Additionally, you should try to consider what you need to support your digital procurement plan. Will you need analytics? Do you need other systems or apps to make it work? Figure out all these important things, and you’ll have a clearer idea of how your plan should work when it’s done.

3. Putting Your Plan Into Action

After all the preparation that you have done, it’s time to start moving with your digital procurement strategy. You must take note to set realistic short-term goals to make progress. Make a schedule to make sure your new digital procurement plan gives you a good return on investment.

Advantagesof Digital Procurement

Here are some of the benefits that you can gain by utilizing digital procurement in your procurement process:

1. Improved Efficiency

Using digital procurement will improve the flow of information in the company. There will be smooth communication that will make the processes faster.

2. Saves More Money

The traditional procurement strategy requires a lot of time and money to maintain its system. Digital procurement saves you money due to the integration of streamlined operations.

3. Transparency

Using digital procurement enables the business to see the data that are processed. It also lets different departments or teams in the company work in sync through the use of technology. Being able to access information can resolve the matter easily.

4. Simplicity and Customer Satisfaction

Digital procurement uses an intuitive user experience so that new users can navigate easily. Digital procurement makes the information accessible for the customers to relieve their worries.

An effective digital procurement system could offer the visibility needed to satisfy the customers. It also makes the process simple for customers.

5. Improved Supply Chain Management

Digital procurement helps improve supply chain management. It is beneficial for the shipping and deliveries of goods. It also enhances vendor management and the standing of your products or services in the supply chain.

Disadvantagesof Digital Procurement

Even if you use automation to streamline your procurement process, there will always be risks for errors. Here are some of the disadvantages when utilizing digital procurement:

1. Suppliers that can’t integrate the same technology as you have

It’s nice to have the latest technology integrated into your procurement process. However, you should remember that not all your suppliers have the capacity to integrate the latest technology.

Thus, you should ensure that introducing a new digital procurement system will not cause problems that can affect your relationship with your suppliers.

2. Problems with integration

When you try to integrate new procurement software, it doesn’t always go as planned. This may happen because of bad planning or because the new software is not compatible with your existing tools.

Thus, if you are going to integrate a new digital procurement system, make sure that you plan it well and that it can be integrated with your existing tools in your procurement process.

3. Slower approval process

Having lots of information is not a bad thing. However, if your digital procurement system can only process limited amounts of data, it can cause bottlenecks. Thus, it results in a slower reviewing process of your documents.

Digital ProcurementTools

We know that digital procurement uses technology that can make your life easier. The following are some of the procurement tools that will help you in your procurement process:

1. Precoro

This tool helps you create purchase orders, track approvals, and assign payments easily. Precoro has a user-friendly interface that makes it easy to use.

Precoro aims to deliver cost-efficient and reliable procurement solutions to help its users reduce costs and increase productivity.

2. Promena Sourcing

Promena is best for companies when it comes to requests for quotations (RFQs). It handles the bids of the suppliers and keeps them organized. It has some features that let you see your previous transaction to check how much you have spent.

3. Procurify

Procurify aims to simplify your purchasing and control your spending. It is able to provide real-time data on your business expenses. This will help minimize your cost and provide transparency in your business.

4. Jiga

Jiga is one of the best tools to be used in the manufacturing business as it is built specifically for this. It centralizes tracking, collaboration, and data to manage the manufacturing procurement process. It removes bottlenecks that stop manufacturing businesses from performing efficiently.

5. Oracle Procurement Cloud

Oracle is best suited to full-scale enterprise resource planning (ERPs). It automates procure-to-pay, supplier management, procurement contracts, and strategic sourcing. If you are looking for a long-lasting procurement tool, Oracle is best for you.

Conclusion

Digital procurement is now in demand as the business landscape is more focused on the integration of new technologies. Although digital procurement allows businesses to thrive in the competition, it entails a huge responsibility on the part of procurement professionals.

Additionally, you must consider your suppliers and other stakeholders in your company before integrating one into your procurement process. By considering them, you are building the gap between you and the stakeholders, resulting in more strengthened relationships.

Frequentlyasked questions

What is digital procurement?

Digital procurement is about acquiring the needs of your business through the use of technology.

Why do businesses utilize digital procurement?

Businesses often use digital procurement to reduce human errors, minimize expenses, and make the procurement process convenient.

What is the best digital procurement tool?

The best digital procurement tool is dependent on your business. Each digital procurement tool has its own advantage based on what business it suits more.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics