Strategy, technology change procurement role

     
 

procurementSupply chain management strategies can change with new technology, at every level and every step of the supply process. Companies have become more agile and visible in recent years, buoyed by new B2B integration systems that can bring trading partners closer than ever. Every step that can either cut costs or add extra value through the addition of new and powerful automation and communication systems is valuable as companies navigate the global economy's tentative recovery.

Procurement's new possibilities

According to industry insider Drew Hofler, writing for Supply Chain Digital, procurement is the latest department to be considered as a stage for companies to save money through technology. The return from these departments, he stated, is no longer measured by how much they cut from budgets but how much extra value they create.

"Procurement has traditionally been recognized and rewarded solely on the basis of its cost-cutting ability,” CFO Publishing researcher Sam Knox told Hofler. "But through the productive use of automated systems, the function has been able to move beyond simply meeting savings targets to help address larger, more-complex issues such as managing cash and capital, managing risks to business performance, and expanding into new markets or business lines."

Hofler stated that finance and procurement departments previously held a simple relationship. The finance users expected procurement to make low-cost purchases and nothing more. New technology has changed the dynamic, with business networks opening up new channels of communication. Hofler stated that the companies have begun to coordinate processes with their allies on a closer level than ever before, a move necessitated by new B2B integration methods and necessitated by the global shifts of modern supply chain strategies.

According to Hofler, the cloud and the business-to-business communication it enables are the latest large-scale technological evolution, as part of a tradition that includes server technology in the 1980s and the internet in the 1990s.

Public sector boosts

New procurement technology is important beyond retail and the private sector in general. Large government agencies can also benefit from strong and modern IT-based procurement apparatuses. According to the Detroit Free Press, Michigan is in the process of examining its options for a next-generation digital procurement system. The new software is meant to be more transparent than the current model and save millions of dollars. The state government makes $3 billion worth of purchases every year, the newspaper said.