Rachel McCart, Director of Product Marketing, SAP
As the procurement function evolves in response to macroeconomic trends, it is a critical linchpin to the health of any growing business. Mid-sized businesses have taken notice and are leveraging new technologies to uplevel their internal purchasing processes.
Oxford Economics study A survey of mid-sized businesses found that nearly half of procurement leaders surveyed are adopting digital technologies to enhance foundational capabilities, including spend analysis, invoice management, contract management, supplier management, purchasing, sourcing and strategic sourcing planning.
Integrating procurement and finance solutions helps align strategies to achieve common organizational goals.
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But as disruptions become more frequent and more prevalent, severely impacting business performance and causing greater profit losses, companies need to do more: Procurement processes need to be structurally changed to be resilient enough to protect margins, maintain compliance, and drive efficiencies.
To build a resilient procurement process, midsize businesses should focus on two key goals in their digital transformation initiatives:
Greater visibility into spending through harmonization
Mid-sized businesses face significant challenges in achieving their aggressive growth goals. According to Oxford Economics, 41% of mid-sized procurement leaders identify macroeconomic issues as their biggest threat. At the same time, their top goals include attracting new customers, increasing revenue, and improving profitability.
Integrating procurement and finance solutions helps align strategies to achieve common organizational goals. Procurement may prioritize efficiency in service delivery, while finance focuses on metrics such as earnings per share or earnings before interest and taxes. Yet, both functions agree on driving efficient processes, measuring profitability, optimizing resources, reducing costs, and improving financial health.
Supplier diversification based on real-time insights
To build a resilient procurement strategy, mid-sized businesses need to diversify their suppliers and adopt a risk-based approach, yet 30% of procurement leaders see limited supply chain visibility and ineffective supplier relationship management as their biggest risks.
Procurement leaders can overcome this hurdle by using modern analytics to gain real-time insight into risk while strengthening organizational trust and supporting growth objectives. Cloud-based supply chain management solutions enable you to consolidate and leverage data to forecast demand and streamline logistics. Plus, you can make faster, more informed decisions by analyzing spend history, supplier performance, and potential risks like inventory shortages and regulatory violations.
How to apply technology strategically
The key to achieving these goals is the strategic and comprehensive adoption of modern technology. Cirque du Soleil teeth, Mid-sized businesses have taken this step.
A fast-growing live entertainment brand optimized its procurement process by leveraging digital tools to manage supplier rates, spend policies, and expense reporting for more than 6,000 trips per year and thousands of room bookings per month. AI-powered guidance also sped up the procurement process and enhanced decision-making, making it easier for staff and performers to request the goods, services, and reservations they needed.
Cirque du Soleil’s impressive sourcing improvements are based on the following principles:
Establishing a cloud-integrated digital foundation
Deploy cloud ERP to ensure a smooth flow of data between procurement, finance, and other business departments. The technology supports real-time data sharing and collaboration, which is essential for making informed decisions and responding quickly 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 help predict potential disruptions, identify cost-saving opportunities, and recommend strategic actions to optimize procurement processes.
Leverage the benefits of the cloud
Cloud-based solutions offer flexibility, scalability and accessibility, empowering procurement teams to access critical data anytime, anywhere, improving collaboration with suppliers and partners around the world and enhancing the security of sensitive procurement data.
Strengthening supplier relationship management systems
Supplier relationship management solutions centralize vendor communications, 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 increases efficiency by reducing time spent on repetitive tasks like invoice processing, order management, and compliance checks, allowing procurement teams to focus on strategic decision-making and value-added activities.
Where success thrives in a dynamic economy
Real-time insights, AI-driven analytics and cloud-based solutions will play a pivotal role in making procurement processes more resilient.
But the impact of these technologies goes beyond risk mitigation, resource optimization, and aligning procurement strategies with overall business goals. More importantly, they enable mid-sized businesses to build their brand and grow with confidence, regardless of the economic climate.
Learn how midsize companies are developing their sourcing strategies in this SAP-sponsored Oxford Economics study.Managing Digital Transformation: The Increased Centralization of Procurement in Midsize Organizations. “
