Digital Procurement: From Myth, To Unleashing The Full Potential
Digital Procurement: From Myth, To Unleashing The Full Potential
Digital Procurement: From Myth, To Unleashing The Full Potential
DIGITAL PROCUREMENT
FROM MYTH, TO UNLEASHING THE FULL POTENTIAL
CONTENTS
00 04
INTRODUCTION CAPITALIZE ON
P. 02 NEW SOURCING
P. 18
02 06
USE BIG DATA ROBOTIZE
AND ANALYTICS SOURCING
TO MAXIMIZE THE TASKS
PROCUREMENT P. 28
LEVER
P. 10
01 05
CAPITALIZE DIGITIZE
ON NEW COST PROCUREMENT
PERFORMANCE PROCESSES AND
LEVERS COLLABORATION
P. 04 P. 22
03 07
USE BLOCKCHAIN DESIGN A DIGITAL
TO SECURE THE PROCUREMENT
SUPPLY CHAIN TRANSFORMATION
P. 14 PLAN
P. 34
1
INTRODUCTION
We are in the midst of a digital revolution. By 2030, Eight major trends underly these
profound transformations:
an estimated 60 percent of the world’s population will access
the internet exclusively via mobile devices, with the number DIGITAL CLIENT RELATIONSHIP
of such devices expected to reach more than six per person E-commerce and online banking on the one
hand, digital marketing and social networks on
on average. Over 90 percent of all data now available was the other, are transforming cost structures and
generated in the past two years, and this number is expected creating performance opportunities that must
be captured by procurement.
to double every two years.
NEW ECONOMIC MODELS
Each day, large globalized corporations – many of them The advent of new models (Uberization,
historically leaders and players in their markets – are Sharing Economy, “As a Service”, and Cloud)
among suppliers offers attractive pockets of
confronted with new challenges: new competition, new competitiveness, thanks to new economic
business models, value migration, intermediation, and rationales, but may also give rise to greater
dependency and more complex negotiation
disintermediation. The relatively stable competitive situations, as well as data property and
environment of the 2000s is a thing of the past, and threats security issues.
– some with irreversible consequences – loom from every
side. Who can forget the emblematic examples of market DATA MANAGEMENT
leaders missing the digital transformation? Borders, once a The masses of data available inside and outside
US bookstore leader, driven into bankruptcy in 2011; Kodak, the organization, and machine-learning
algorithms, can be used to maximize the
defunct in 2012; Blockbuster, the American videocassette amplitude of procurement leverage, but also
rental leader, vanishing in 2014. represent regulatory challenges (GDPR).
BLOCKCHAIN
We are witnessing a new wave of digital disruption: The Blockchain may be used to secure sourcing
appearance of Uber has led to 30 percent to 40 percent and sourcing channels, contracts, and payments,
as well as analyze market trends on a large scale.
decreases in taxi revenues in certain countries; the projected
market capitalization of Airbnb is as much as the largest public
hotel company worldwide (and almost twice the second). ROBOTICS AND ARTIFICIAL INTELLIGENCE
These are just two examples of a widely documented trend. The advent of robotics (RPA, collaborative
robots, autonomous vehicles, etc.) will have a
sustainable impact on the cost of work and is
Adapting business models is a matter of survival for large opening up new performance opportunities.
corporations. There is no shortage of success stories:
CONNECTED OBJECTS
large banking companies going into online banking;
The Internet of Things is bursting onto
the development of Industry 4.0; multichannel retail the scene in traditional industries and
distribution; Uberization, and more. revolutionizing direct costs, maintenance
purchases, and investment plans through
digital asset management.
Purchasing, specifically, is challenged to capitalize on
these transformations, which represent the opportunity 3D PRINTING
Production costs, sourcing channels,
to cross the next frontier of cost optimization and achieve and procurement of small batch, spare
previously unheard-of cost savings. There moreover exist parts, and prototypes will likely be
completely reconfigured.
greater efficiencies to be gained in how the procurement
function operates: Digitally enabled collaboration with DRONES
internal stakeholders and suppliers, automated/robotized Last mile logistics costs and preventative
maintenance costs for hard-to-access
processes and activities, partnership with startups... infrastructures may henceforth be optimized.
2
These trends have a significant impact on the way companies operate. Given the new
challenges and concepts, how should procurement be used to capitalize concretely
on digital transformation and how should the procurement system be migrated?
Optimize efficiency
of procurement
•• Dematerialize processes How to ensure agile resource
and collaboration. allocation and engage
prescribers and suppliers?
•• Robotize sourcing activities.
01 •• Challenge historical
suppliers on their digital
maturity and on their ability
CAPITALIZE to deliver performance
ON NEW COST levels unattainable through
traditional operating models.
PERFORMANCE
•• Integrate digital pure
LEVERS players into the company’s
supplier ecosystem.
4
Exhibit 1: THE NUMBER OF BANK BRANCHES IS DECLINING IN DEVELOPED COUNTRIES (2011–2016)
CANADA
2.7% NETHERLANDS1
-33.5%
UK2
-9.0% GERMANY1
-9.6%
FRANCE1
ITALY1 JAPAN
-2.3% 0.5%
US -9.2%
-6.8% SPAIN1
-22.5%
AUSTRALIA
-4.1%
90%
mastered demand management levers, there
of e-commerce and online banking. Walmart,
is seemingly little improvement that can be
the American retail giant, closed 269 stores
made in the short term. of all tasks
in 2016, including 154 in the United States;
and activities
HSBC closed 321 branches in 2015 and 2016, robotized
In an era of digital transformation, many
27 percent of its network.
more opportunities for savings exist. Indeed,
we could provide an almost endless list,
Conversely, e-commerce pure players are
if needed. Briefly, here are some examples
getting into physical distribution. A striking
that we find particularly compelling.
100%
Reduce “Bricks and Leverage connected objects
SPEND Mortar” presence to the and associated data to reduce
80% LESS profit of digital presence. unnecessary activities.
Leverage
Use robots, data for
60% Use new
Reduce costs
example is Amazon’s Amazon Go concept store, The use of robots is also moving forward in the
opened in Seattle in 2016, which foregoes cash service sector. For example, the Pepper robot
registers and cashiers. Amazon Go is supported developed jointly with startup Aldebaran,
by an impressive combination of technologies performs hospitality functions in European
that leverage mobility, the digital and social stations. Pepper can detect the presence
consumer ecosystem, connected objects, of travelers in a station, welcome them,
captors, radio‑frequency identification (RFID), assist them in finding information about
and big data with machine‑learning algorithms. their journey, gather data concerning their
satisfaction, and more. In the hotel sector,
a striking example of robotics utilization is
Robots, drones, and Japan’s Henn-na Hotel, where 90 percent
artificial intelligence of personnel functions have been robotized.
Robots are replacing human labor, Drones are revolutionizing the surveillance of
performing tasks once considered beyond infrastructures that are difficult or hazardous
their capabilities, including customer‑facing to access. An example of this is in the
functions. These trends are particularly telecommunications and electrical industries
prevalent in industry (collaborative robots) where teams currently must be on site
and logistics (AGV – “auto-guided vehicles”, simply to make observations and, if they are
such as autonomous handling equipment), necessary, transport resources by helicopter
as well as shipping (self-driving trucks). (a very costly proposition).
6
PREVENTATIVE MAINTENANCE AND INTERNET OF THINGS
EXAMPLES OF INDUCED BENEFITS
These examples are but a few of the seemingly To effectively support business lines in
infinite number of new opportunities to reduce transforming for the digital age, procurement
costs and improve performance. must be active on a number of fronts:
2.3
1.0 0.9
0.4
8
Exhibit 4: RISING 3D PRINTING SPEND BY 2020
CASE STUDY
$ BB 28.9
02
generate a high value
by-product: data.
Quantity of data rises exponentially,
USE BIG DATA including new forms of data, as well
as granularity and complexity.
AND ANALYTICS
This creates unprecedented
TO MAXIMIZE THE opportunities to pull new insights
PROCUREMENT for procurement and maximize the
impact of optimization levers , but
LEVER also new challenges to be able to
fully leverage it.
10
What type of data?
CASE STUDY
To extend its mastery of data, above and beyond
its traditional playing field, procurement can RETAIL DISTRIBUTION CASE
focus on exploring three dimensions:
Buyers traditionally spend considerable time gathering
•• DEEPEN THE FUNDAMENTAL DATA of the the information needed for their negotiations (including
procurement/finance cube. This could consulting reports and documentation).
mean, for example, integrating detailed The most innovative analytical approaches help automate
supplier invoicing into ERP to preserve a fine the recovery and synthesis of this information, so that
level of granularity on the type and quantity buyers can devote their time to higher-value tasks, such
of purchased goods and services, hence as procurement strategies and negotiation tactics.
adding new dimensions to spend analysis. Basic data traditionally used by buyers (historical prices
and volumes) is enriched by analyzing sales data (drawn
•• EXTRACT AND LEVERAGE COST DATA BY
from cash register transactions), consumer data (from
WORK UNIT/CONSUMPTION UNIT (such as loyalty accounts), data on margins, product quality/
HR, Finance, Supply Chain, Manufacturing, non‑quality (returns/after-sale service), and behavioral
Sales, and Marketing). Such an approach data on e-commerce site users. Findings can then be used
would help break down information silos to generate powerful fact-based negotiation arguments
and identify real demand/consumption for all categories of products and buyers.
patterns: cost by employee, cost per square This approach may also be further reinforced by adding
foot, and cost per process, per distribution richer external data (panelists, competitor prices, and
channel, or per customer. raw materials prices).
•• ENRICH DATA WITH EXTERNAL SOURCES, In some cases, automation has even been used
from suppliers (such as integration to generate automatic negotiation arguments —
of supplier inventory), customers particularly relevant for small and medium suppliers,
to which buyers cannot afford to devote as much time
(identification of cost-generating customer
as to first‑tier suppliers.
profiles), or third parties (raw material
prices and supplier certifications).
Why?
Understand consumption patterns. in charge of creating a whole series of
Big data integration and analysis provide a consumption metrics based on a cross- TESCO, A
degree of visibility and transparency factually comparison of spend with targeted cost drivers: MULTINATIONAL
supporting observations only partially number of employees, revenues, number of GROCERY
demonstrable in the past. Buyers making transactions, and square meters of floor space. AND RETAILER,
use of them will be in a strong position
at the negotiation table with suppliers These indicators are then measured and
and will be equipped to address internal communicated regularly and can be used to
demand challenges. Over time, big data orient remedial measures jointly with business
will also shed new light on procurement lines. Procurement thus possesses a factual
strategy development. KPI base to track and challenge demand, used big
data to cut
which then can provide a means to automate its annual
An analytical approach to challenge and the production of these KPIs. refrigeration
track demand was adopted by one of the cooling costs by
20%
largest European banks when it established Maximize the negotiation lever.
a dedicated procurement analytics team A core historical activity of procurement —
1
Granularity
DATA
4
3
2
UNSTRUCTURED
Complexity
DATA
+
1. Traditional procurement information fishnet: structured data from finance ERP and procurement systems
2. Integration of detailed supplier data and basic internal data from other functions
3. Integration of detailed structured internal data from other functions/businesses
4. Integration of customer data and third-party data (market studies, suppliers’ external databases, commodity prices, etc.)
5. Integration of data from unstructured sources: raw text, images, sound, video, etc.
Source: Oliver Wyman
CASE STUDY
MRO
CATEGORY KEY PRINCIPLES OF THE EUROPEAN GDPR
KPI EXAMPLE
•• Extraterritorial application: The regulation will apply to companies established
outside the EU, which process data concerning the activities of EU organizations.
1. Average MRO spend per
production line vs. value •• Explicit and positive consent: Companies and other bodies must give citizens
of production output (%). more control over their private data. This also applies within the framework of
subcontracting relationships.
2. Compliance percentage
•• Right to oblivion: Those concerned have the right to oblige data processing
vs. negotiated contract
managers to delete their personal data at the earliest opportunity.
prices and catalogues.
•• Right to portability: Those concerned have the right to receive personal data
3. Percentage of original provided to data processing managers in a structured format commonly utilized
equipment spare vs. first and legible by machine.
mount brand, vs. 3rd
•• Profiling: Any person has the right not to be subject to a decision founded
party spares.
exclusively on automated processing.
4. Spare parts inventory •• Security by default: Organizations must take into account obligations
level vs. value of output. concerning protection of personal data starting from product design.
5. Value of spare •• Notification in case of leaks: In the event of a serious data breach, companies
parts inventory. and other bodies are required to notify national protection authorities as soon
as possible.
6. Overall Equipment
•• More important sanctions: Regulations give regulators the power to impose
Effectiveness (OEE)
financial sanctions representing up to 4 percent of global company revenues
vs. Maintenance costs.
or €20 million in the event of non-compliance.
12
supplier negotiations — is undergoing new
developments catalyzed by leveraging big CASE STUDIES
data. Examples abound in retail distribution,
as well as telecommunications. LARGE INTEGRATED BANK:
MANAGING SUPPLIER RISK
For procurement, the challenge is considerable:
Managing procurement risks is a major objective
•• DEVELOP AND MAINTAIN SPECIALIZED of procurement in the banking sector, specifically within
ANALYTICAL CAPABILITIES, possessed by the framework of new central bank directives. The stakes
a small number of individuals, generally are twofold: improve visibility on the risk level of all
suppliers and move from static to dynamic management
found outside procurement.
of procurement risk. For instance, one large banking concern
•• MOVE FROM THE AGGREGATION OF DATA completes its traditional risk-tracking scorecards (analysis
REQUIRED MERELY TO LEVERAGE LARGE of financial health, rate of dependency, and corporate
social responsibility (CSR) assessment by EcoVadis) with
MASSES OF DATA, to the development
an analysis of weak risk signals for its key suppliers. Big data
of advanced machine learning/deep resources are used to analyze all the information produced
learning analytical models in order to by diverse sources such as the Financial Times, Twitter,
uncover insights inaccessible using LinkedIn, and specialized networks in the supplier industry.
standard analyses (relations/correlations), By leveraging key words, the model identifies weak signals
and also make reliable predictions. corresponding to potential risks and thus makes them easier
to anticipate. Proof-of-concept results were conclusive,
•• REINFORCE THE ABILITY TO INTEGRATE and the system is now being implemented across several
WITH OTHER COMPANY FUNCTIONS TO procurement categories. Finally, this system can be reversed
ACCESS DATA, and involve the IT department and used to anticipate weak signals linked to innovation
in complex data integration projects and in (using “positive” key words).
developing advanced analytical solutions.
•• MANAGE REGULATORY IMPLICATIONS OF
DATA MANAGEMENT, SUCH AS THE EUROPEAN
TELECOMMUNICATIONS
GDPR (General Data Protection Regulation) CARRIER CASE
directive, which will come into effect in May In telecommunications, big data initiatives helped a
2018 and should help create a harmonized European procurement consortium (IT, Network, Terminals)
framework from the multiple national laws employ advanced negotiation practices.
currently in effect.
Granular spend data (category, sub-category) were made
•• FINALLY, THE HISTORICAL ACTIVITIES available centrally—whereas they had previously been
AND PRACTICES OF BUYERS WILL BE scattered and held by each carrier locally—and crossed
with market data to track and measure market share
TRANSFORMED. Procurement must once
with the large manufacturers in the consortium member
again act as a true change agent, but this portfolio, including details on the level of quality/level
time focused on itself. of service of each supplier.
03
utilization, security and
transparency have become
core concerns for all companies.
Blockchain technology creates
USE BLOCKCHAIN new opportunities that
TO SECURE THE procurement departments should
seize to improve the traceability
SUPPLY CHAIN and the security of product
sourcing and supply chains.
14
Blockchain structures data in a way
that makes it possible to create and
share a digital journal in which all
forms of transactions are recorded
Applied to procurement and supply chain, •• THE MINING GIANT, BHP BILITON, IS
TESTING THIS TECHNOLOGY to track the
blockchain can be used to introduce hitherto
movements of rock-drilled shafts and fluid
unattainable transparency in sourcing samples. Blockchain technology allows all
and distribution channels. Currently, such involved parties to share sample location
information will be partial, unverified, data in real time, gathered from suppliers
unauthenticated, and most importantly, held on every continent.
The transaction
is represented
online as a
“block”
The block
is broadcast
to every party
2
in the network
3
The block
then can be added
4
to the chain, Those in the network
which provides approve the transaction
an indelible is valid
and transparent
record of transactions
$$$
Source: World Economic Forum, Financial Times
16
Where does blockchain
CASE STUDIES
technology stand? What
will the impact be on data?
PROVENANCE
Although blockchain technology has been
A London-based startup founded in 2013, Provenance
proposes solutions based on blockchain technology proven to work for financial transactions,
to trace the origin of products (such as food and which rely solely on the exchange of
manufactured products). information, its use is less advanced for
In 2016, a conclusive test was conducted on the Indonesian material transactions. However, maturation
tuna supply chain (among the most opaque in the world, has accelerated since 2016.
and containing great risks of human slavery practices
among suppliers) integrating blockchain into preexisting
IBM, for instance, has established a test
audit systems.
platform for companies to try the service
During the pilot phase, fishermen simply sent an SMS and assess the advantages to be gained from
to identify each catch, enabling the identification of the
person who made the catch, the fishing location, and blockchain. Blockchain is also available in the
the characteristics of the catch. cloud as well as on private servers, specifically
Using an RFID tag or a QR code, this information can
IBM blockchain-certified LinuxONE servers.
follow the product through every step of the supply chain.
All new information (that is, transformation) is then added IBM also originated the joint initiative with
to the blockchain. Walmart, which has moreover announced
Integration into existing auditing systems enables the creation of the Food Safety Collaboration
integration with company data, creating end-to-end Center in Beijing, and is working jointly with
information with no need for complex interfaces among Tsinghua University to improve the tracking
the different steps of the chain.
of food products intended for Chinese
consumers. If Walmart decides to adopt
blockchain to track food supplies on a global
BLOCKVERIFY
level, this could become the largest-scale
Founded in 2015 and also based in London, BlockVerify deployment ever observed for this technology.
uses blockchain technology to track counterfeit products
and spot fraud.
The collateral impacts on data are also huge,
In particular, BlockVerify has developed applications for because blockchain-type databases can
the pharmaceutical industry, luxury products, diamonds, contain much more information than retail
and electronics.
distributors currently possess, the door is
Its objective is to identify counterfeit products, products open to the next generation of data analytics.
diverted from their initial destination, stolen merchandise,
and fraudulent transactions.
04
are conducted between buyers
and sellers. The development
of intermediation platforms,
the sharing economy, and
CAPITALIZE ON programmatic media procurement
are three major examples of these
NEW SOURCING new models and the new sourcing
options they generate.
18
Uber-everything Exhibit 7: AMERICA’S LEADING ON-DEMAND ROADSIDE
ASSISTANCE SERVICE
Digital transformations (connectivity,
mobility, and geo-tracking) have accelerated URGENT.LY
the emergence of intermediation platforms
between consumers (buyers) and offerings
No membership fees
that were previously fragmented, not
No annual dues
particularly transparent, and variable in
No hidden fees
quality. In the mass market, Uber and Airbnb
are clear examples.
In logistics, Deliver.ee puts retail distributors This is true of platforms like Drivy
in contact with shipping operators to and BlaBlaCar, for example.
ensure last-mile logistics, thus simplifying
subcontractor relations that were hitherto These two examples from everyday life reveal
complex in a fragmented, non-transparent something about the market: the reason this
market of variable quality. new model can compete directly with other
Yardclub FLEET
Increase utilization.
Decrease headaches.
Get an edge on the competition.
lend employees to other companies within
Mobilize your job a secure legal framework and thus adapt
Manage your equipment at the office, personnel costs to business fluctuations,
at the jobsite, or on the go with our
integrated web and mobile platforms while allowing employees to develop
their capabilities.
Maximize ROI
Increase utilization of owned and
For procurement, these new economic
rented equipment so that every models herald the emergence of new sources,
expenditure is worth the investment new types of partners, and new ways to
obtain services. Conversely, such platforms,
Modernize management which represent the potential suppliers of
Upgrade your whiteboard, tomorrow, could also enable companies
and let modern asset management
technology make work easier to monetize underutilized or idle assets,
Source: Yardclub.com
generating complementary revenue. It’s up
to procurement to shed light on all of these
potential applications.
20
capability models (what data to integrate, how The benefit is even greater for midsized
to configure algorithms, and how to negotiate), clients, who have fewer resources and whose
prescriber relationship models (impact of cost procurement organizations are typically
algorithm specifications, how to integrate less developed.
this type of procurement into traditional TV/
Radio advertising, and acceptance to rely on Features that can generate the greatest
automated decision making), and supplier benefits include:
relations (intermediation). 1. Liberate time previously devoted by buyers/
non-buyers/procurement specialists to find
products/suppliers and negotiate prices.
E-commerce B2B: the 2. Consolidate supplier panels to benefit from
“low value spot buy” revolution volume discounts.
3. Integrate contractually-negotiated prices.
In 2015, Amazon launched Amazon Business,
4. Integrate means of payment such as
an online marketplace dedicated to procurement cards.
companies, offering a catalogue of products
5. Manage user profiles and complex
specifically adapted to B2B needs, estimated approval workflows.
at several hundred million SKUs.
6. Track and measure demand with
embedded analytics.
The potential benefits of this new offering are
7. Benefit from free delivery tracking
tremendous and may literally transform how
and 48-hour delivery.
procurement manages (or fails to manage)
8. Benefit from complete product information.
its class C procurement.
Moreover, it is possible to integrate Amazon
These benefits exist both for large companies Business into Coupa/Ariba procurement
that have already deployed industrialized models at companies that are already equipped.
e-procurement systems/outsourced “low
value spot buy” type procurement, and
for midsized companies with difficulties
managing this type of procurement.
05
in efficiency are massive and
would liberate resources to
be reallocated to higher‑value
tasks. The digitization of
DIGITIZE procurement processes also
enables the generation of new
PROCUREMENT data, which can be used in
PROCESSES AND turn to perform more detailed
analyses of procurement
COLLABORATION practices, consumption models,
and supplier transactions.
22
Exhibit 9: SOURCE-TO-PAY PROCESS AND ACTIVITIES
CATEGORY SOURCE PROCURE PERFORMANCE
MANAGEMENT TO CONTRACT TO PAY MANAGEMENT
Spend
analysis Contract e-procurement
Definition and making catalogs Supplier
Reversed
formalization of performance
Business requirements auctions
specifications management
analysis and TCO modeling
Purchase
Roadmap Contract request and
Supply base and action
management signature purchase
tracking order
Suppliers
offer analysis
Tender Financial
Benchmarking (allocation
management Goods performance
scenarios,
(RFI/RFP) Contract receipt and management
“what if”
analysis,…) database accounts
payable
Buyer/Stakeholder collaboration
What activities are concerned? contact inside and outside the organization,
in order to work on prescriptive optimization
What is the target objective? levers and maximize the level of control over
With this in mind, digitization of procurement consumption (volume driver) by ensuring the
processes and tasks must aim for a reliability of transactional systems.
twofold objective:
16%
4%
Small-Medium
Enterprise
15%
65%
24
Find a way to deploy systems
with ergonomics comparable
to what buyers experience in
their personal lives
Coupa
9.0
Puridiom1
GEP
8.5
Determine Sciquest
Ivalua
Basware
8.0 Zycus
Ariba3
Wax Digital
7.5
Birchstreet Tradeshift
Verian2
7.0
Xeeva Buyerquest
6.5
Esker
6.0
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5
ADAPTABILITY (PROVIDER EXPERIENCE AND RESOURCES)
26
Technological advances, combined with the
explosion of mobility, data, and cloud solutions,
make these approaches more relevant than ever
•• INSTALL INTEGRATED/PACKAGED
We can expect the industry to move toward
SOLUTIONS BY THE MOST INNOVATIVE consolidation in the coming years in favor
SOFTWARE PUBLISHERS on the market, of a few dominant solutions, as well as move
with a minimum of customization and toward adjacent markets. Such was the case
integration. This was the choice made, for with Tradeshift (adopted by Air France),
example, by an European leader in specialty a firm initially positioned on downstream
chemicals, which implemented Salesfore procurement processes, but which gradually
for all procurement tasks.
moved up the chain to sourcing tasks and
•• DEVELOP CUSTOMIZED BEST-OF-BREED supplier relationship management.
SOLUTIONS, using a basic software
publisher solution which is then massively
customized. This may be a good idea, for
instance, when some processes are already KEY TAKEAWAYS
optimized and implementing a standard
•• Digitization of procurement processes and
solution would degrade performance. collaboration has been a long standing story,
A major integrated bank decided to however with slow ramp-up of adoption overall.
go this route, specifically for buying •• Technical integration of solutions and user
intellectual IT services. adoption were the two major historical
•• ALLIANCE WITH INNOVATIVE STARTUPS: pain points, especially for incumbent
solution providers.
Develop mobile front ends focused on
creating a consistent user experience, •• Most recently, next generation vendors
(e.g. COUPA) or innovative start-ups have
regardless of the functional building blocks
successfully addressed these challenges by
used at the back end, to ensure maximal providing instant “as a service” solutions with
adoption and best-in-class ergonomics, a compelling user experience.
accelerating processes and collaboration. •• Procurement leaders must integrate next
generation solutions to successfully drive
We are now witnessing the emergence of process efficiency and increased compliance,
a significant number of startups beginning demand management, and analytics.
06
both complex and repetitive
transactional tasks in a more
efficient and cost-effective
manner. The media is filled with
ROBOTIZE examples of the dawn of these
disruptive technologies, and
SOURCING TASKS a growing share of jobs will soon
be affected by robotization.
28
Exhibit 13: BENEFITS OF RPA
Description • Replicate complex • Leverage API-level • Learn and adapt over time • Combines smart data
process actions integrations to create and smart algorithms
system-to-system • Become independent
• Perform actions taken but with fewer errors • Decision making based
by humans at automations
on machine learning
presentation layer of • Share automations • Leverage and synthesis of
any desktop-based with Task bots unstructured data large datasets
application • Capable of making
• When combined with
• Capable of executing Task bots, Meta bots decisions based on
multi-step processes are ideal for multi-skill accumulated learning
processes and experience
Best for • Repetitive, rules-based • Complex, scalable • Managing through • Language interaction,
tasks relying on processes fuzzy rules and processing and dealing
structured data processing with high amounts
unstructured data of unstructured data
30
Exhibit 15: RPA ADOPTION IN PURCHASE-TO-PAY
77%None
16%
7%
Partially rolled out
Piloting
0%
Fully adopted
Savings generated should therefore be Work will move, both in terms of roles
progressively reinvested in structural and geographical location. Purchasing
digitization and process automation, with the professionals regularly spend a major share
long view in sight. The end goal here ought of their time on repetitive low value-added
to be developing fully digital processes. tasks. The use of robots could free up
considerable time that can be reallocated
In addition, the experiences of companies that to more value-added tasks. Here the relevant
have made use of RPA featured challenges questions are: Will companies’ available
specifically related to organizational change: capabilities support this reallocation
resistance from employees; concerns about of professionals towards more complex
compliance and security; overly complex and higher-value work? What will be
technology rollouts; mismatches with vendors, the resulting impact on labor relations?
even with the technology itself; managing
squeamish stakeholders; and a general lack
of vision and strategy.
32
CASE STUDY
THE VODAFONE
PROCUREMENT COMPANY
The Vodafone Procurement Company centrally manages
around €20 billion of spend every year for Vodafone
businesses and partners in more than 26 countries.
Its 300–plus category managers will soon be using
cognitive computing to support virtually every aspect of
the procurement and supply chain management process.
The aim is to create the “category managers of the future,”
to turbo-charge decision making and to open up new business
opportunities through the practice of “self-disruption.”
TEN
DIGITAL IDEAS
FROM OLIVER WYMAN
36
Oliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialized expertise in strategy,
operations, risk management, and organization transformation.
Oliver Wyman’s global Operations Practice specializes in end-to-end operations transformation capabilities to address costs, risks,
efficiency, and effectiveness. Our global team offers a comprehensive and expert set of functional capabilities and high-impact solutions
to address the key issues faced by Chief Operating Officers and Chief Procurement Officers across industries.
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www.oliverwyman.com