The Joy of Finance curates and summarizes the best finance and operations content for busy folks. You can sign-up for the newsletter here.
The Next Generation of Digital Procurement Tools
New tools and solutions for digital finance are emerging at a torrid pace. Unfortunately for CPOs, these solutions don’t always come with an illuminated road map to show them exactly which solutions are right from them. Due to the extensive information provided by McKinsey, we will be splitting this summary into two parts.
Part I will discuss tools that identify and create value, while Part II covers the solutions that prevent value leakage.
For more specific information regarding finance automation, click here.
Value Identification and Creation Tools
- Solutions pull historic purchase order and invoice data to generate a spend cube.
- Expected to improve through increased data sources and category-level Key Performance Indicators (KPIs).
- Linking a spend cube to a company’s budget planning data in real-time would lead to directly tracking profits and losses.
Collaborative and Advanced Sourcing
Some emerging solutions can guide procurement category managers through the stages of a strategic workflow process.
- Category Strategy Workflow Portal: Guide category managers through a stage-gate process for every step in category strategy creation
- Category Analytics Solution: Analysis algorithms will be coded into standardized applications
- Cleansheet and Should-cost Analyses: Identify savings opportunities by knowing what something “should cost” at peak efficiency
- Business Collaboration Portals: Digital platforms to view demand/specification data and vendor insights/analysis to introduce agility in the sourcing process
- Supplier X Ray: Costs, lead times, capacities, inventories, and risks contribute to real-time supplier profiles, offering a comprehensive supplier visibility
- E-sourcing Events: Future solutions could provide solutions such as bid comparisons and optimizations, enhancing the effectiveness of digitally-managed sourcing events
- Supplier Collaboration: Applications will serve as a network for a company and its suppliers to enhance cost optimization and speed up interactions
With these solutions, teams can collaborate via shared digital spaces and mediums, while managers track activity in real-time. Documentation and insights can be stored and assembled automatically, all while category strategy development consumes less time and resources than before.
Read Part II: Tools for preventing value leakage.
Read the full article “Driving Superior Value Through Digital Procurement” click here.