If asked about a department that changes the least, procurement would be among the top responses. Yet among companies surveyed this year, 82% of procurement organizations reported undergoing change.
That’s a huge number and a big jump from years past when just about a third of companies surveyed planned to make changes in their procurement department. What’s shifting? Technology, and along with it, the role of procurement.
In larger companies, procurement may be responsible for as much as one-third of the entire business function. As companies grow more complex, they need more people to research, hire, and manage third-party vendors. Enter the procurement department which may be responsible for supply chain management, third party vendors, and more.
Technology’s Impact on Procurement and Supply Chain Management
As you may have guessed, technology plays the biggest role in the seismic shift that’s happening today throughout the supply chain.
Technology such as enterprise resource planning, business intelligence, and other accounting and financial management systems have transformed the amount and quality of data available. Now with enhanced reports, real-time analytics, and updates from throughout the supply chain, companies can use that knowledge to enhance their operations.
More information on supplier costs can be used to negotiate lower prices; updates from the supply chain provide better service, and more data means better business management throughout the company.
Leveraging Big Data
Another area in which supply chain management is changing is in the use of big data. Big data and analytics are now affordable and available to companies of many sizes thanks to cloud-based software, which provides robust functionality at a fraction of the cost of previous site-based versions.
Big data can be used for everything from budgeting to forecasting. Real-time analytics and insight into every aspect of a company can be used to reduce costs, improve sales, and enhance productivity.
The Internet of Things (IoT)
Last on the list of market forces affecting supply chain management and procurement is the Internet of Things (IoT). The IoT refers to the ability to add internet-linked devices to vehicles, pallets, and other objects. Data can be sent from the object to the internet and through a central resource such as your ERP system. Companies transporting perishable materials may use the IoT to monitor temperature fluctuations during transport. Manufacturers use geo targeting to get up to the minute information on the location of raw materials or customer orders. As the IoT grows, more data added to a company’s system lends itself to more reports, better analytics, and additional insights that can lead to profitable businesses.
Procurement: Not Just a Back-Office Function Anymore
Procurement used to be relegated to a back-office function, a department that handled acquiring items and sourcing vendors. Not anymore. With companies relying upon procurement to find the lowest cost and best quality raw goods and materials, procurement is now an integral part of the sales process.
To that end, companies are indeed investing in the transformation of their procurement departments. This transformation goes beyond new software, although it often encompasses the purchase of new software. It gets to the heart of procurement’s role in the big picture of the business, and the way in which a sound, well-managed procurement department, fueled by data and analytics, can add to a businesses’ bottom line.
Accounting Systems Incorporated (ASI)
Accounting Systems Incorporated (ASI) provides ERP, accounting, and other software and systems to help your company grow. Cloud-based software such as Sage 100 and Acumatica ERP can be used with mobile devices such as smartphones and tablets. These products can provide the business intelligence you need to grow your company. For more information, visit our website, or call us at 803-252-6154.