The future of procurement is digital. Experts share the tech skills you need to thrive in that future.
The future of procurement is digital. How can you make sure you’re part of that future? By understanding what your company needs from procurement, then using the right digital tools to meet those needs.
Here are the most valuable tech skills in procurement:
Supplier risk management
Companies want better supplier risk management, especially in the wake of COVID-19.
Our recent Supply Chain Confidence Index showed 27% of respondents didn’t have the tools they needed to act quickly in the crisis.
That’s why supplier risk management technology is top of procurement leaders’ list of digital priorities.
Employers now expect procurement teams to move faster and mitigate risk long before another crisis hits.
End-to-end supply chain visibility
A by-product of proper supplier risk management is increased visibility, according to Hau Lee, Professor of Operations, Information and Technology at the Stanford Graduate School of Business.
“You need end-to-end visibility about your supply network (capacity, inventory, disruptions, production yields, lead time, bottlenecks, social and environmental performances, their financial conditions, etc.), and your demand network (orders, demand forecasts, backlogs, channel inventory, promotion plans, and disruptions),” Lee says.
There are a host of tools out there to improve visibility. One is IBM Sterling Inventory Visibility, which is a cloud-based Software as a Service (SaaS). It compiles all of your inventory information from different platforms so you can see available product in real-time.
That’s just one example. Lee recommends educating yourself about other available tools that improve visibility. These harness technology like the Internet of Things (IoT), machine learning, and deep data analytics.
Reduce complexity in global sourcing
Professor Lee says understanding the intricacies of global trade, and how technology can reduce complexity, can make you an extremely valuable asset.
“Today, you need to be aware of the tens of thousands of bilateral trade agreements that exist between some key trading countries for products and components that may affect you,” Lee says.
And not just for minimising disruption. Where and how you source products can have a major impact on your bottom line.
Lee uses the example of breaking up a product and sourcing parts from different countries, like sourcing frames from Cambodia while the other parts from China. That way, you can use Cambodia as the country of origin instead of China, which can save you a great deal in taxes and custom duties.
“As countries start to gradually recover from COVID-19, attention will be shifted back (it has already started) to trade wars, tariff frictions, and protectionism,” Lee says. “Databases from WTO, for example, should be useful. Some experts call this “tariff engineering,” and there can be big differences.”
Conduct due diligence on suppliers for complete transparency
Ethical sourcing is already a hot topic, and it’s even more scrutinised now. Your company’s reputation is on the line, and you are held accountable for how and where you source materials.
It’s certainly a top concern for your company’s executives. They desperately want assurance that suppliers are reputable. Luckily there are digital tools that help you do your due diligence for potential suppliers, Professor Lee says.
“For example, many big brands have already been using IPE, the Chinese website that captures environmental violations in China, as a source of data to do due diligence of their prospective suppliers,” Lee says.
In fact, companies like Nike use apps to connect with the factory workers and educate them, Lee says. “[That] allows them to have better visibility of the conditions of the factories (instead of just relying on imperfect factory audits to monitor), and at the same time help to improve productivity there.”
Interpret data in a meaningful way
Being able to understand and interpret data is sorely needed in procurement.
This is especially true before you bring in new tech systems, says Susan Walsh, Founder of The Classification Guru.
“An area that’s often neglected is data preparation or cleansing before the implementation of any new software or systems,” Walsh wrote in a recent blog. “By the time it’s discovered there are errors in the data, staff have lost faith in using the software and are disengaged, claiming it doesn’t work, or they don’t trust it because it’s wrong.”
Research from Deloitte shows CPOs struggle with an organisation’s data complexity. If you can untangle data and whip it into something meaningful, you’ll have a job for life.
Step away from the admin
The beauty of procurement technology is cutting out admin and simplifying processes.
The ugly side of that same technology is displacing people who currently handle that admin. That’s why you need to gain useful skills beyond manual data processing if you want a future in procurement.
But where do you start, especially if new technology seems overwhelming?
Craig Carter, Professor of Supply Chain Management in the W. P. Carey School of Business at Arizona State University, says start with the basics.
“Supply management professionals need to have a general understanding of all of the technologies that are being adopted or are on the horizon – AI, blockchain, descriptive analytics, and predictive analytics,” Carter says.
But don’t panic, as Carter adds that understanding does not mean mastery. You don’t need to become an expert overnight.
Technology is coming
Don’t be surprised if this future tech is on your desk a lot sooner than you think. The pandemic has only accelerated the adoption of technology, as shown by our Supply Chain Confidence Index.
When asked which technologies show the most promise for helping to mitigate future pandemics and supply disruptions, 49% said predictive analytics and 38% said AI/ machine learning.
Ultimately, companies will do anything they can to minimise risk. Which is why procurement is so perfectly placed to contribute.
All you need to do is prove you have the answers they need, says Professor Carter.
“What is necessary is a demonstration of a procurement professional’s strategic value,” Carter says.
“Procurement professionals who can critically analyse, think strategically, and build relationships will continue to be in demand.”
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