By Andrea Brody, Chief Marketing Officer of BravoSolution

Organisations are aggressively implementing new technologies to streamline processes and increase efficiency, but one department is treading behind: procurement.

The Hackett Group’s Sourcing Cycle Time and Cost Measurement Study, which surveyed procurement professionals from a variety of industries, shows that for every $1 billion in spend, companies have an average of 16 full-time employees dedicated to the sourcing process. In other words: procurement teams are stretched far too thin. There’s a significant need to automate manual tasks, increase efficiency and effectiveness, and give procurement the resources it needs to keep up with the rest of the organisation.

Digital transformation can help. Investing in modern, integrated procurement tools can enable procurement teams to deliver even more value and agility for the organization, and help the business be more responsive to changing stakeholder needs. In short: going digital delivers higher procurement and business ROI, with less resources.

Reaping the benefits of digitisation.

Total sourcing cycle times typically range from one day for tactical buys to 120 days for high-complexity events. About half of this cycle time is currently spent on supplier evaluation and contracting alone. If organisations want to be more efficient and effective, they should focus on streamlining these workflows and re-allocating time and energy to more complex, strategic parts of the procurement process. Digitising the supplier discoverye-sourcing and contract lifecycle management (CLM) processes can help teams get there. Consider the benefits:

  • A 31 percent time reduction in finding and qualifying new suppliers
  • Lowering overall cycle time by 30 percent through standard templates that reduce data-collection errors
  • Reducing the amount of time required to find a contract by 52 percent and the number of lapsed contracts by 39 percent

The good news is that many organizations are already planning for digital transformation. In fact, Hackett Group survey respondents stated that improving procurement’s business agility (61%) and supporting enterprise digital transformation objectives (42%) are top priorities for procurement teams.

This notion is supported by the fact that organisations incorporating strategic sourcing programs and technology into their procurement frameworks are starting to use less resource-intensive approaches for handling non-critical spend. The Hackett Group’s study found that 70 percent of souring resources are currently dedicated to medium- and high-complexity events and account for 56 percent of overall spend and 41 percent of sourcing staff, while low-complexity sourcing accounts for only 16 percent of overall spend and 30 percent of sourcing staff.

This breakdown signifies organizations are actively rebalancing sourcing efforts and looking for opportunities to streamline processes for more effective results – the key for successful digital transformation. Not all spend is created equally, which means different technology and strategies are necessary to address each category. When handled properly, complex approaches result in more value for the organization, so spending more time and resources in these strategic areas, and using less resource-intensive approaches for handling non-critical spend, is a crucial step.

Another finding: 33 percent of organisations said digital transformation is an important initiative, but are not sure that that means for them. Get the clarity you need: Download the Hackett Group’s full 2017 Sourcing Cycle Time and Cost Measurement Study to learn more.