eProcurement 2016: What the future holds for the procurement team

eProcurement 2016: What the future holds for the procurement team

April 8, 2014

eProcurement has advanced considerably over the ten years that Nextenders has been developing its software. The pace of change is only going to increase – driven forward by an ever-more-connected supply chain, sophisticated eProcurement platforms and even greater demand for value. In this article we present our eProcurement forecast and outline what we think procurement professionals should be preparing for in the next two or three years.

Organisations will demand more value from procurement

The overarching trend, one that we’re already seeing, is the race for value from eProcurement. This takes procurement activity beyond spend management towards new and innovative ways to contribute value.

If it isn’t the case already in your organisation, the expectation that procurement delivers cost-savings will just be business as usual. Stakeholders and management are going to be expecting procurement to contribute value in a broader sense with a more holistic view of the supply chain, sourcing policy and forward planning.

Better use of data

Data is a hot topic today and procurement will definitely feel its impact. More and more is going to be expected from eProcurement data and reporting. One clearly emerging trend is for more analytics around every element of the eProcurement process.

The procurement team will be expected to uncover insights into its organisation’s practice and the contribution of supply management to the bottom line.

Of course, the volume of data will vary from business to business. But at the top end, for those who run hundreds or even thousands of tenders a month, with hundreds of questions accumulating thousands of individual data points, multiplied by dozens of respondents over the course of a year – a great deal of data will be present in the system and available for analysis.

Put all that data in one place and eProcurement systems can start to run systematic enquiries. Increasingly the tools will allow the recognition of patterns – spikes, trends and correlations. Analytics can reveal performance metrics that provide a higher level of insight into the effectiveness both of procurement itself and of the organisation as a whole.

Even greater scrutiny

eProcurement systems will also increasingly provide the opportunity to run wider financial analyses using system and imported data. The procurement team will be expected to uncover insights into its organisation’s practice and the contribution of supply management to capitalisation and rates of return. Procurement will be asked to develop financial business cases and run models and scenarios for what-if decision-making.

There will be more spend analysis and much more benchmarking work expected. Data-centric platforms support dynamic feedback loops and enable agile procurement. The likely result will be emerging pockets of best practice that will show others the way to eliminate waste and make the best deals on a much more systematic basis. Those businesses will continue to spend less and gain more from eProcurement activity and will embed a real competitive advantage in their organisation.

More diversity and dynamism

As systems of all kinds become more integrated, procurement professionals can expect to see the procurement information base broadening. This means more inputs from outside the procurement department and more collaboration across the organisation, especially during live procurement events.

Ideally the eProcurement system itself will support the integration of information from a diverse range of sources. These might include intelligence on market trends, information on emerging legal and regulatory changes, data on supplier capacity, news on mergers and acquisitions, and market data such as commodity price forecasts.

Procurement professionals should embrace this because it delivers on the promise of cross-department working. Ultimately it leads to better decision making. It means that those outside of procurement are more likely to have greater confidence in procurement’s decisions. Indeed, the procurement team ought to actively facilitate wider information gathering, and this need not be difficult where the right systems are set up to engage the right people in the right way.

More complexity. At greater speed

Ever-increasing speed and complexity are two predictions that are rarely proved wrong. In our experience there is much scope for applying the possibilities opened up by the right kind of eProcurement software to procurement practice.

Procurement tools will become so intuitive that non-procurement professionals will be using them.

Data-centric eProcurement can handle complex scenarios and will increasingly be used in this way. This will enable good procurement practice to be applied to more and more scenarios and industries without an increase in procurement overhead.

There will also be more complex techno-commercial evaluation procedures calling for real-time online validation of data. Procurement managers will become process experts, embedding their organisation’s best practice in the process whilst expanding participation across the organisation. The bottom line advantages for firms will be very significant, and the larger the project, the more potential there will be to make substantial savings.

End-to-end will mean even more

eProcurement systems can already automate much of the buying process, from supplier qualification to contract management, eInvoicing and ePayment. This automation of the function will continue and extend.

Procurement tools will become so intuitive that non-procurement professionals will be using them, while procurement professionals’ time is freed up for more value-adding, strategic tasks. With greater integration and real-time data, the eProcurement system of 2016 will support the sourcing of goods based on market dynamics. They will be able to enact predetermined negotiation strategies without any human intervention and will place orders based on pre-set minimum and maximum levels. The next iteration will see eProcurement systems extend further into the supply chain and, at the other end, the product lifecycle.

What the future holds for the Procurement team

Procurement professionals will increasingly want to position themselves as internal consultants – conduits to the outside realities of supply and demand, and internal partners in solving business problems. The end-game will be more collaboration to the point of integrated joint planning along the product lifecycle.

Playing a bigger role in risk management strategies and strategic decision-making has long been a goal for many in the procurement community. The challenges we’ve described are actually all opportunities for procurement professionals. They’ll need to acquire sources of insight into global supply markets. They’ll need to be effective in linking business managers to external suppliers for important conversations about competitive differentiation. But eProcurement systems are set to play a central role in liberating and empowering procurement departments.