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    What is the Role of Procurement in the Broader Digital Society?

    Innovation

    With our autonomous commerce strategy, JAGGAER is changing the way today’s procurement teams work. But how does that fit into the broader picture of digital transformation? This executive TV programme, The Digital Society, broadcast on Sky TV, brought together JAGGAER with two organisations offering complementary services: Cyber-Duck a digital transformation consultancy, and Reference Point, a business focused on training and workforce management, and membership community management. 

    Watch The Digital Society Here

    A common theme we see in the programme is putting the user experience at the heart of the digital transformation. 

    Today, procurement is helping companies to mitigate risks and ensure that environmental, social and governance guidelines are adhered to in the supply chain, for example. Procurement is being called upon to do this in an uncertain environment where we’ve come out of a pandemic but are now facing new challenges such as high inflation, increased supply chain distruption and the impact of the war in Ukraine. 

    As Matthew Gibson, the Chief Production Officer of Cyber-Duck pointed out, digital transformation is a journey, not a process with an end point. Transformation breeds transformation. Today, mitigating supply chain risk is a central element of that transformation. This is especially the case in the procurement of direct components and materials, which typically account for upwards of 80% of spend in manufacturing companies. 

    Digital Transformation in Action at Hitachi Rail

    I am delighted to have filmed this programme alongside Rory Lamont FCIPS, Group CPO, Hitachi Rail. Rory highlighted the supplier qualification process as just one example of how digital transformation is delivering clear benefits: “We need to check through the supplier’s financials, their quality systems, the design they’ve produced, their track record, where they operate, who they are owned by. These touch on virtually all of the core functions of our busienss, so for us to be able to automate that process with JAGGAER is really powerful.”

    Like many organisations, Hitachi Rail is seeing procurement move from a transactional back-office function focused on cost reduction and efficiencies to one that plays a more strategic role. This is good for business, but it is also one that is a more satisfying and rewarding experience for procurement professionals.

    Rory pointed out that, while the data may come in from various sources, with JAGGAER it is all entered into a central repository for easy analysis based on the company’s evaluation criteria. This helps give people the best and easiest buying experience. For procurement professionals it becomes more like the experience they get when they buy things online as consumers. It also frees up time to spend on more strategic activities that add value.

    The role of artificial intelligence

    A central message of the programme is that automation drives up productivity, which ultimately improves our livelihoods. The transparency and flexibility of digital systems makes this automation easier than ever, giving organisations greater operational agility.

    Recent events have made supply chain issues the biggest threat to business. Artificial intelligence is playing an ever-larger role in addressing these issues. AI can learn from historical data and act as an assistant to procurement professionals, giving recommendations such as, “based on what has happened over the past six months, you should be doing A, B or C”. A lot of routine activities, such as wading through paper contracts to find out which are about to expire, can now be automated thanks to AI. This also frees up time that can be used more productively.

    Another feature of the digital world is that we are increasingly interconnected, networked. And nowhere more so than in supply chains. This was crucial during the pandemic. As Rory Lamont said, “We needed to act quickly to ensure that our supply chains were sustainable and to understand where the risks lay … that was a much less complicated task than it would have been even three years ago.” Hitachi started applying its risk analysis when Covid-19 first appeared in Italy, where it had three strategic suppliers, and then progressively as the virus spread to other parts of Europe and beyond. They could see in advance where it was moving and how this was likely to disrupt the supply base.

    In general, the businesses that came through the pandemic most successfully were those that were able to navigate through the data points, mapped their supplier networks most effectively and move away from the “this is how we’ve always done it” approach. Transparency and the benefits of AI have enabled them to make these decisions quickly and make the most of these opportunities.

    Digital transformation must make B2B commerce easier

    As consumers we take it for granted that buying online is easy. People in organisations have similar expectations. In reality, online commerce involves vast networks of buyers and suppliers, often from different parts of the world, transacting with each other. The whole point of procurement technology and our vision of autonomous commerce is extending the consumer experience to buyers and suppliers in the business-to-business world, using intelligent software. And as you’ll see in the programme, this is gathering pace and extending into all aspects of economic activity.

    Digital transformation is a vast topic that we will explore further over the coming months. It is going to change the way we live in many ways – I highly recommend watching the programme! It already provides plenty of food for thought.

     

    Watch the Digital Society below…

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