Why Procurement Simplified Is Much More than a Slogan

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Deloitte’s 2019 Global CPO Survey identifies the key challenges that procurement professionals are struggling to tackle. The biggest risk factors, according to the survey, are the economic downturn and deflation (cited by 42% of respondents), internal complexity due to M&A activity, organizational silos, non-standard processes (39%), managing complexity within mega-suppliers (37%), trade war (33%), managing digital fragmentation internally and within the supply base (29%), Brexit uncertainty and other outcomes of trade negotiations (23%) and a whole host of other sources of volatility and uncertainty.

Deloitte summarizes this whole jumble of risks and challenges with a single word: complexity.

“The complex role of the chief procurement officer (CPO) now faces emerging economic and political risks in every direction they turn — and they feel pressured to cut costs along the way,” writes Deloitte. CPOs are expected to streamline processes while working within shrinking budgets. Deloitte has been conducting this annual survey since 2011 and states that the 2019 research has surfaced complexities that had never appeared previously. Only 39% of respondents feel that they are largely prepared to combat and navigate these risks, while only 5% feel completely prepared.

“The complex role of the chief procurement officer (CPO) now faces emerging economic and political risks in every direction they turn — and they feel pressured to cut costs along the way.”

Full details of the report, which was conducted in association with procurement market intelligence firm Spend Matters and Odgers Berndston, are available here. 481 procurement leaders from 35 countries took part, representing organizations with a combined annual turnover of US$5 trillion.

We could not agree more with the statement made by Lee Barter, partner, Deloitte Canada on releasing the report: “CPOs have more technology tools at their disposal than ever before — they just need to make sure they use these tools properly and plan for the risks associated with them. Still, the potential of these technologies to cut costs and weather uncertainty is tremendous. My best advice? Go digital.”

“My best advice? Go digital.”

At JAGGAER we recognize that it is an increasingly complex world out there, which is precisely why our strategy is to simplify procurement wherever possible. The precondition for this was to create a single platform that encompasses all processes from source to pay for both indirect and direct spend: JAGGAER ONE. That is already a massive step forward, though of course it is not enough in itself to deal with all of the external uncertainties identified in the Deloitte report. We have therefore invested in solutions for specific vertical sectors. To take one example: The JAGGAER Advanced Sourcing Optimizer (ASO), which simplifies transportation sourcing for manufacturing companies having to cope with the complexity of highly diverse transport pricing models across different European countries.

Advanced technologies, and artificial intelligence in particular, will further ease the burden of complexity by eliminating much of the inefficient and error-prone routine from procurement, and much of the uncertainty. At our recent REV2019 conference, we unveiled some important recent initiatives in this direction: the JAGGAER Smart Assistant, which leverages natural language processing (NLP) and machine learning (ML) to provide guidance and recommendations via contextual conversations; the JAGGAER On Time Delivery Predictor, which predicts if an order will be delivered on time to within 95 percent accuracy, a huge and sustainable benefit to manufacturing companies, especially those that rely on just-in-time component and materials delivery; and the Recommendations Engine, which interrogates historical data to recommend the best course of action to procurement professionals in a given set of circumstances.

It’s a complex world out there and it shows no signs of getting less so. But streamlined processes and artificial intelligence will improve decision making for CPOs: Procurement Simplified.

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