demystifying the path toward digital procurement · procurement teams are in the early stage of...
TRANSCRIPT
Demystifying the path toward
digital procurement
David Schannon Partner, Bain & Company
2IOFM conference_DigitalProcure ...SFR
Whyare we talking about digital
Whyare we talking about digital
Increased connectivity
More data
Greater computing power
Digital is
happening
now
New business models
Leaner operations
Re-defined operating models
Digital will
transform
your business
Faster processes
Increased value to the business
Buy Better + Spend BetterSM
Digital will
change
procurement
Augmented
Reality
Digitalrecombinant innovation
Artificial
Intelligence
Robotics
3D Printing
Autonomy
key technologies
Advanced Analytics / Big data, Blockchain, Wearables, Sensors, IoT, Microelectronics,
Cybersecurity, Advanced communications, Disruptive Cloud computing, Digital engagement, …
ConstructionVirtualized
sites
Consumer productsDigital Marketing
MedtechRobotic Surgery
Manufacturing3D Printing
of applications
Digitalreal use cases
Cost QualitySpeed Growth
Digitalcreates value
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Digital is impacting industries at a different pace
No cohesive digital
strategy, just pockets
of investment
Digital strategies
are emerging
in silos
Digital strategy is
embedded within the
enterprise strategy
Construction Mining Oil & Gas PharmaUtilities
Grade 1Digital is nascent
Manu-
facturing
Consumer
products
Healthcare/
Medtech
Transport/
Logistics
Education
Hotels
Airlines
Auto
Grade 2Digital is a differentiator
Insurance
Banking
RetailTelco Tech Media
Grade 3Digital is table stakes
7IOFM conference_DigitalProcure ...SFR
Procurement teams
are in the
early stage of
digital adoptions
Of procurement leaders
believe there is more they
could be doing to leverage
the latest digital tools
80%of procurement department have
deployed technologies like
Big Data, serverless architecture
or blockchain technology
10%rely solely on Microsoft office
tools for category management
stakeholder management, and
risk management
70%
8IOFM conference_DigitalProcure ...SFR
In the era of digitization,
CPO has a new pivotal
role to be an accelerator
ResistorStuck in old ways of operating;
limited participation in innovation
See slow “cycle” time within procurement
processes, across functions
Finds difficulty reallocating resources
despite proven upside
ReactorReactive to digital trends
Follows others (business leaders, competitors) on how
and where to innovate
Cautious and less consistent digital process management
AcceleratorAdvocate for and enabler of innovation;
thought partner to business leadership
Willing to test and trial new solutions
across capabilities
Effective and proactive manager of
transformation process
What kind of leader will
yoube?
9IOFM conference_DigitalProcure ...SFR
Key digital themes emerge within procurement functions
Frictionless
collaborationEnhanced partnering across
stakeholders and suppliers
Smarter
procurementAdvanced optimization
of procurement spend
Automated
and agileStep-function acceleration of
operational processes
Context
Sourcing to contract
Procure to pay
Automated
and agile
Step-function acceleration of
operational processes
AI enabled
supplier landscape,
shortlist leveraging
market and internal
data streams
Sophisticated
spend analysis
Streamlined
contracting life cycle
with ‘smart contracts’
Digitally enabled
selection process
Fully automated
invoicing and
payment process
Supplier portals and
self-service reporting
Underlying data lake integrating
multi-source master data
Blockchain
technology
Artificial Intelligence (AI) and robotic
process automation (RPA)
Example
technologies
Context
Frictionless
collaboration
Enhanced partnering across
stakeholders and suppliers
Predictive forecasting
and flagging risk of material
and labor shortages
Real time data
collection and sharing
across groups
Single source of
truth and real time
access to spend
and financial data
Stakeholder
management
toolsProcurement
Platform to collaborate with self service optionsRFI/P process, contract negotiations, unit and specification design
Context
Smarter
procurement
Advanced optimization of
procurement spend across Buy
Better + Spend BetterSM levers
Optimization
levers
Price
negotiations
Volume
allocation
Demand control
and compliance
Design-
to-cost
System cost
reduction
“Buy better” “Spend better”
Negotiate prices
Negotiate terms
Manage price risks
Pool volumes / contracts
Shift volumes to best price
suppliers
Leverage procurement networks
Control demand
Enforce compliance
Reduce complexity
Perform value
engineering
TCO process
improvement
Collaborative
improvement
Optimize value-add
supply chain
AI/ML predictive
price analytics
Demand
forecasting
Design tools with
approved parts
Spend
analytics
Vendor
co-development
Example
digital
enablers
points of digital light
Network intelligence to identify and qualify suppliers
Spend audit
tools
Demand
forecasting
3D printing for niche parts to
reduce lead-time
RPA to reduce touches
for invoice processing
Integrating
large data for better spend
analysis
Predictive
analytics to identify
opportunity areas
Enhanced,
real time
spend analytics
provided to business partners
Supplier portals
for improved
communications and
access to data
Mobile apps for digital transportation
and delivery documentation
Developing new
partnerships across the ecosystem
Context
Pre-procurement Sourcing to contract (S2C)
Procure to
pay (P2P) Ongoing
Overall procurement
strategy
Category management Sourcing Supplier
relationship
management
PurchasingPerformance
ManagementDefining categories Spend analysis Supplier selection Contract management
major digital use cases being deployed today
Supplier Management
Risk Management
Supplier Quality Management
Transport optimization
Procure-to-Pay Suite
E-invoicing
Dynamic Discounting
Recovery audit
MRO Procurement
Robotic Process Automation
On-demand/On-location Parts Manufacturing
Inventory Management Systems
Multi-domain Master Data Management
Vendor Management Systems (VMS) / Statement of Work (SOW) Solutions
Network/Market Data Intelligence
Spend Analysis
Demand Forecasting
Parts search and selection software
Social Procurement Tools
E-auctions
Contract Life Cycle Management
Collaborative Data Platform
15IOFM conference_DigitalProcure ...SFR
A Bain survey highlights five top digital solutions 2018 by category
Most important
to business
Inventory Management Systems
Multi-Domain Master Data Management
Contract Life Cycle
Supplier Quality Management
Spend Analysis
Highest deployment
adoption
Inventory Management Systems
Multi Domain Master Data Management
E-invoicing
Spend Analysis
Demand Forecasting
Satisfaction
with solution
Recovery Audit
Supplier Quality Management
Transport Optimization
E-invoicing
Collaborative Data Platform
Context
More importantLess important
Low
satisfaction
High
satisfaction
Importance of solution to company over next 5 years
Satisfaction with solution currently deployed
Adoption
of
solution
Step 1
Step 2
Step 3
Step 4
steps to deploying
digital procurement solutions
Context
More importantLess important
Low
satisfaction
High
satisfaction
Importance of solution to company over next 5 years
Satisfaction with solution currently deployed
Adoption
of
solution
Recovery audit Transportation optimization
Collaborative data platform
Supplier quality management
E-invoicing
Start with solutions that users are very satisfied with, as they are likely to be successfully
deployed, and build momentum for digitizing procurementS T E P
Context
More importantLess important
Low
satisfaction
High
satisfaction
Importance of solution to company over next 5 years
Satisfaction with solution currently deployed
Adoption
of
solution
Supplier
management
Multi-domain
master data
Management
Risk
management
MRO
procurement
SOW
Solutions/VMS
Procure-to-pay
suite
On-demand
parts and
manufacturing
Next, focus on very important solutions with relatively high satisfaction,
as they are likely to deliver on ROI and prove value for future investmentS T E P
Context
More importantLess important
Low
satisfaction
High
satisfaction
Importance of solution to company over next 5 years
Satisfaction with solution currently deployed
Adoption
of
solution
Network
/Market Data
IntelligenceSpend
analysis
Demand
forecasting
Inventory management systems
Contract
lifecycle
management
Proceed with caution on solutions with lower satisfaction ratings,
and ensure solutions are a good match for your needsS T E P
Context
More importantLess important
Low
satisfaction
High
satisfaction
Importance of solution to company over next 5 years
Satisfaction with solution currently deployed
Adoption
of
solution
Parts search &
selection software
RPA
Social
procurement tools
E-auctions
Dynamic
discounting
Take a highly discerning approach to investment in solutions rated low in satisfaction and
importance; wait until technology improvesS T E P
21IOFM conference_DigitalProcure ...SFR
Deciding where to invest first
Cross-functional readiness
Technology requirements
Data readiness
ROI
Priority digital solutions
Highest potential digital solutions for near-term deployment
Is your data formatted in a way to enable full functionality of tools?
Can your company’s technology adopt this?
Can you get prioritization in the IT pipeline?
Do teams (and cross-functional leaders) have the openness, ability,
buy-in, and time required to adopt a new digital solution and process?
Can you create a business case with a true return (savings from
external spend, people spend, working capital, increased
production, or improved time to market)?
22IOFM conference_DigitalProcure ...SFR
Our approach
Procurement digital roadmap development
InputsGather inputs from overall company,
internal stakeholders, and industry,
digital and market trends
VisionCraft your long-term digital vision
for procurement, and consider the
technologies, talent, and systems required
RoadmapDevelop the stepping stone to achieve
the vision; ruthlessly prioritize to
develop a track-record of success
23IOFM conference_DigitalProcure ...SFR
Our approach
Procurement digital roadmap development
Inputs Vision Roadmap
Procurement digital vision
“the
what”Source-to-
contract,
procure-to-pay
process
Role in
accelerated
innovation
Vendor
management
Category
management
“the
how”
Talent and
culture
Data and
analytics
Operating model
& partnerships
Systems and
technology
Wave 1 goals
Fill in text
Key investments
Fill in text
Business case
Fill in text
Timeline
Fill in text
Industry digital
direction
Procurement digital
departure
Function digital
direction
Company vision
Closingperspectives
(Too) many solutions
for procurement teams
to consider
Digital is innovating
and accelerating
at an unprecedented pace
Prioritize solutions
likely to succeed
and drive real value
—vet team, IT, and
data readiness
before diving in