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  • Writer's pictureStephen Fodor

How Procurement Leaders Are Weathering The Staggering Costs Of Supply Chain Disruption

July 22, 2021

(Forbes) Extreme weather, a global pandemic, and continuous market uncertainties are just a few of the supply chain shocks businesses and their customers have been absorbing in the past few years. According to one survey, organizations best able to manage the pandemic were the ones that embraced digital transformation. What’s more, a large percentage of respondents regretted not accelerating to digital fast enough.

“Companies that recognize the role of technology in transforming their business models are the ones that have been able to thrive,” said Chris Willcocks, head of intelligent spend management at SAP ANZ. “Customers are focused on driving visibility in their supply chains and through their data, becoming an agile intelligent enterprise, increasing the resilience of their functions in business, and identifying and reducing risk.”

Intelligent enterprises innovate with business networks Speaking with Baber Farooq, senior vice president of intelligent spend management at SAP, during the SAPPHIRE NOW ANZ event, Willcocks gave the virtual audience a glimpse into the future of procurement. It’s built on insights from quality data across supply chains, bringing buyers much closer to their suppliers. Noting that procurement doesn’t exist in a vacuum, Willcocks said that collaborative business networks are foundational to digital transformation.

“When you’re connected not only to your suppliers, but to your customers and their customers, you make the move to being an intelligent enterprise,” he said.

Autonomous procurement for intelligent spend Just when the world needs to boost productivity to recover from the worldwide pandemic, markets are facing potentially dire shortages of both goods and labor. The answer lies in intelligent procurement where people do the things that machines cannot replicate.

“Procurement is at the heart of solving these [productivity] problems,” said Farooq. “That’s why we’re focused on automating more and more processes ─ what we call autonomous procurement. Intelligent spend is finding out what machines can do and letting machines do that, and getting people to focus on the things that people do, which is establishing strategic relationships with suppliers.” Digitalized procurement translates to business innovation In digitalizing forecasting, inventory management, and other collaboration points between buyers and suppliers, business networks have profoundly changed procurement. Teams have the time to be more productive, which translates to innovation.

“I was talking to an automotive customer who said that over 90 percent of the innovation they have in their cars came from their suppliers,” said Farooq. “Another customer in Asia recently launched an initiative where they used the SAP business network supporting the goal of paying all suppliers within seven days. The network allows you to foster that amazing relationship with the supplier because everything is digital…People can do what they do best, which is driving relationships and working on innovation.”

Farooq challenged the audience to ask themselves, despite all the technological innovations the world has experienced in the past decade, if they had more time today for their work than they did 10 years ago.

“Technology has come about to make people more productive, but it has to get out of the way,” he said.

“The heart of AI is to make businesses more effective…if we can make procurement organizations more productive, procurement organizations can make their entire business more productive, becoming a strategic advisor to the C-suite.”

As for those organizations that regret not digitalizing fast enough to head off the worst business impacts from this pandemic, it’s not too late to prepare now for the next supply chain disruptions headed our way soon.

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