Delays in Transformation of Procurement Process - The Influence of Personality!
In the realm of digital procurement, many organisations find themselves struggling to transform despite technological advancements. According to recent research, the main hurdles lie in scaling pilot projects, outdated IT investment processes, lack of clear strategy alignment, and insufficient stakeholder engagement [1].
One of the key issues is scaling pilots to enterprise-wide deployment. Successful digitisation pilots, often focused on limited use cases, frequently fail to scale globally within organisations, thereby limiting their impact [1]. Traditional IT and contract processes are also not well-suited for startup-like, agile technology exploration environments [1].
Another challenge is a lack of clear vision and awareness among participants in innovation procurement, which impedes broad participation and adoption [2]. Misalignment of procurement strategy and roadmap can also lead to initiatives lacking coherence and agility [3].
To improve team composition and foster innovation in procurement, several strategies have proven effective. Creating dedicated innovation units, such as technology garages, allows companies to simultaneously explore multiple emerging tech startups and assess ROI rapidly, facilitating fact-based innovation decisions [1]. Forming new-technology ventures teams, like those at Otto Group, enables active engagement with startups and co-development of applications, accelerating experimentation and innovation adoption [1].
Establishing centres of excellence, as Walmart has done, is responsible for global rollout at scale and ROI maximisation, professionalising procurement transformation [1]. Enhancing stakeholder engagement and knowledge sharing through training and awareness programs helps overcome capacity and understanding gaps among procurement teams and suppliers regarding innovation procurement [2].
Adopting flexible, resilient transformation roadmaps ensures regular revisits and adjustments to reflect changing business needs and stakeholder priorities for better alignment and outcomes [3]. Leveraging AI and automation, such as AI-driven tools for sourcing, contract management, compliance, and risk monitoring, can cut manual work, increase efficiency, and enhance decision-making [5].
The pragmatic nature of procurement professionals, who tend to prioritise facts over emotions or others' opinions, may not naturally lend itself to innovation. However, by making a table of individual personalities, behavioural tendencies, and team roles, organisations can identify any areas that are missing or lacking [4]. Options for changing team composition include augmentation, training, communication improvement, and new practices [4].
Discussion about test results can create an environment for change, and commitment to the new approach by all (or majority) members is crucial [4]. Procurement teams should make the new way of thinking and doing things a habit, and monitoring activities and outcomes is important for successful change [6].
In conclusion, digital procurement transformation struggles stem from organisational, process, and cultural barriers rather than lack of technology capability. Success requires shifting procurement team composition towards innovation-focused roles, fostering collaboration with startups, aligning strategies with flexible roadmaps, and embracing AI-powered transparency and automation to drive scale and effectiveness across the global enterprise [1][2][3][5].
Sources: [1] McKinsey & Company. (2018). The digital procurement transformation. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-digital-procurement-transformation [2] Procurement Leaders. (2017). Innovation procurement: The new imperative for business success. Retrieved from https://www.procurementleaders.com/reports/innovation-procurement-the-new-imperative-for-business-success/ [3] Deloitte. (2018). The future of procurement: A CPO agenda for digital transformation. Retrieved from https://www2.deloitte.com/us/en/pages/operations/articles/the-future-of-procurement-a-cpo-agenda-for-digital-transformation.html [4] Procurious. (2017). The state of procurement 2017. Retrieved from https://www.procurious.com/state-of-procurement-2017 [5] Gartner. (2019). Gartner predicts AI will create $3.9 trillion of business value in 2022. Retrieved from https://www.gartner.com/en/newsroom/press-releases/2019-09-10-gartner-predicts-ai-will-create-3-9-trillion-of-business-value-in-2022 [6] Katalin Brennan, permission to publish the procurement transformation article was provided by.
- To address the scaling issue in supply chain management, organizations can create dedicated innovation units, such as technology garages, allowing for rapid assessment of emerging tech startups and their return on investment.
- Adopting flexible, resilient transformation roadmaps with regular revisits and adjustments can help ensure better alignment and outcomes for business needs and stakeholder priorities.
- Leveraging technology, like AI and automation, for sourcing, contract management, compliance, and risk monitoring can cut manual work, increase efficiency, and enhance decision-making in the procurement process.
- Enhancing stakeholder engagement and knowledge sharing through education-and-self-development programs can help overcome capacity and understanding gaps among procurement teams and suppliers regarding innovation procurement.
