Digital Transformation in Procurement Has to Start at the Top

Procurement is entering a new era. Time to evaluate how companies’ digital transformation efforts are coming along!

How far have they come in their digitalization initiatives? Have they managed to successfullyorganize data, processes, and interconnection in procurement? We’ve partnered with ESB Business School and the German BME (Bundesverband Materialwirtschaft, Einkauf und Logistik) and asked 272 German companies (many of them SAPcustomers) about their digital transformation.

The resultsare not surprising yet still disappointing: digitalization largely hasn’thappened yet. Every third company is operating without a clear procurementstrategy, and half of respondents indicated that the number of digitalprocurement sources was still low.

Digital transformationis prerequisite for automation in procurement—and yet, in all areas of procurement, companies are lacking clear strategies concerning digital solutions, and holistic automation.

Only a fraction of respondents (15 percent) use digital systems for process optimization in procurement. This is surprising since there are various tools and systems available which facilitate digital transformation.

Delaying digitalization in procurement not the way to go

Companies often see their current success as an excuse to delay digital transformation—why fix it if it isn't broken? Consequently, they invest too little in sustainable, efficient digital solutions—a decision which will almost certainly come back to bite them later.

In the past, procurement companies often were the source for innovation, diversification and growth, acting as accelerator for digital transformation and automation. This is crucial as procurement is facing and will continue to face many obstacles—fast-changing markets, growing supply chain risks and an ever-evolving workforce, for example.

I thinkthat if companies finally realize the important role that procurement plays,they are making sure they benefit and profit from digital transformation. Furthermore, top management will have to start actively championing fordigitalization to happen. Digital transformation in procurement has to start atthe top to change hearts and minds on the issue.

Only by establishing a digital mindset in top management can companies sustainably transform procurement.