By Rachel McCart, Director of Product Marketing, SAP
A procurement function that evolves in response to macroeconomic trends is a critical linchpin in the health of any growing business. And midsize companies are taking note, leveling up their internal buying processes with the latest technologies.
Oxford Economics’ research on midsize businesses shows that approximately half of surveyed procurement leaders adopt digital technologies to enhance foundational capabilities. They include spend analysis, invoice management, contract management, supplier management, purchasing, sourcing, and strategic procurement planning.
However, firms need to do more as disruptions occur faster and more often, impacting performance profoundly and causing higher profit losses. Procurement processes must undergo structural changes to become resilient enough to safeguard margins, maintain compliance, and drive efficiency.
To build resilient procurement processes, midsize companies need to focus on two critical objectives in their digital transformation initiatives:
Expanding spend visibility with harmonization
Midsize firms face significant challenges in pursuing aggressive growth targets. According to Oxford Economics, 41% of procurement leaders from midsize businesses identify macroeconomic issues as their greatest threat. Simultaneously, their top goals include attracting new customers, growing revenue, and improving profitability.
Integrating procurement and finance solutions can help align strategies to achieve common organizational goals. While procurement may prioritize service delivery efficiency, finance might focus on metrics, such as earnings per share and earnings before interest and taxes. Yet, both functions agree on facilitating efficient processes, measuring profitability, optimizing resources, reducing costs, and improving financial health.
Diversifying suppliers based on real-time insights
To build a resilient procurement strategy, midsize companies must diversify their suppliers and adopt a risk-based approach. However, 30% of procurement leaders consider limited supply chain visibility and ineffective supplier relationship management as their top risks.
Procurement leaders can overcome this hurdle by using modern analytics for real-time insights into risks while strengthening organizational confidence and supporting growth objectives. With a cloud-based supply chain management solution, they can unify data and leverage it to forecast demand and streamline logistics. Additionally, more-informed decisions can be made faster by analyzing spend history, supplier performance, and potential risks such as stock shortages or regulatory noncompliance.
How to apply technology strategically
The key to achieving these goals is a strategic and comprehensive adoption of the latest technology. Cirque du Soleil is a prime example of a midsize company taking this step.
The flourishing live entertainment brand optimized its procurement processes by leveraging digital tools to manage supplier rates, spending policies, and expense reporting for over 6,000 trips annually and thousands of room bookings monthly. And with AI-powered guidance speeding up procurement processes and enhancing decision-making, staff and performers now find requesting the goods, services, and bookings they need simpler.
Cirque du Soleil’s impressive procurement improvements are based on these principles:
Establish an integrated digital foundation in the cloud
Adopting a cloud ERP-enabled smooth data flow between procurement, finance, and other business departments. This technology supports real-time data sharing and collaboration, which is crucial for making informed decisions and responding swiftly to disruptions.
Prioritize the use of advanced analytics and AI
Advanced analytics and AI provide deeper insights into spending patterns, supplier performance, and market trends. AI-driven tools can help predict potential disruptions, identify cost-saving opportunities, and recommend strategic actions to optimize procurement processes.
Embrace the benefits of the cloud
Cloud-based solutions offer flexibility, scalability, and accessibility, helping ensure procurement teams can access critical data from anywhere, anytime. This facilitates better collaboration with global suppliers and partners and enhances security for sensitive procurement data.
Enhance the supplier relationship management system
Supplier relationship management solutions centralize vendor communication, performance tracking, and contract management. These solutions automate routine tasks, allowing procurement professionals to focus on strategic activities and relationship building.
Automate routine tasks
Automation enhances efficiency by reducing time spent on repetitive tasks such as invoice processing, order management, and compliance checks. This allows procurement teams to focus on strategic decision-making and value-added activities.
Where success in a dynamic economy thrives
Real-time insights, AI-driven analytics, and cloud-based solutions play pivotal roles in increasing the resilience of procurement processes.
However, the impact of these technologies is more significant than mitigating risks, optimizing resources, and aligning procurement strategies with overall business objectives. More important, they allow midsize companies to confidently build their brand and grow – no matter the economic condition.
Discover how midsize businesses shape their procurement strategies in the Oxford Economics study, sponsored by SAP, “Managing Digital Transformation: Procurement’s Growing Centricity within Midsize Organizations.”
