It’s 2017, and when I read publications, talk to colleagues or implement new digital solutions in procurement, I always think that this area is sometimes too diverse. There is common knowledge on how things should look like inside Procurement, however, there is no single concept for the “outside part” of it, i.e. there is no industry-wide message aimed at creation of unified digital instruments that would empower cooperation and ensure standardization in business-market interactions.
Going digital for Procurement, is perceived as a future breakthrough. Still, this vision needs to be supported with effective comprehensive tools. In other words, Procurement would benefit immensely from having a single USB-like interface that would ensure standardized digital cooperation between Procurement and suppliers and shape the market in general. I think USB is a good example because we use this standard every day without giving it much thought. We all, I’m sure, remember the times when mobile phones and laptops emerged, and there were multiple different cables and ports and one needed adapters to connect devices. Nowadays, if you want to plug in or connect a dozen devices of various types – no problem, a single standard makes it super easy to do so. Conceptually, today’s Procurement is following the same path. We see that this function is developing digital solutions, but the largest players offer products with no link to the existing market. In addition, every time we have to use an adapter of some sort (that we need to adjust or create first), at the end of the day you’re the one who’ll pay for it.
Creating a standard for Procurement will enhance our expectations from going digital. Suppliers will be released from inventing solutions for each client and their platforms. Procurement will be able to get insights in an almost real-time mode, and the market will enjoy better and more precise benchmarks. Introduction of catalogs with access for multiple suppliers will be an everyday norm instead of an exception. And this is to say nothing about BIG DATA that deserves to be covered separately.
At the moment, indirect commercial procurement, in general, has no single standard. The largest players including SAP Ariba, Basware, Coupa, GEP and others, should unite their efforts in building the digital environment with the support of the consulting world that can help in spreading the solutions among suppliers. I believe this topic deserves to be a priority on the agenda in professional procurement consulting forums and conferences.
According to Empowered by Analytics; Procurement 2025 by Ernst & Young, the market needs to develop analytics through the implementation of digital solutions that will be linked closely to supplier market and social media. Let’s take for example virtual trade centers where companies and their employees could shop for stationery while enjoying a wide range of offers instead of one approved supplier. Payment capabilities could include individual virtual payment cards or virtual currency. By the way, major payment systems already have efficient B2B payment solutions to offer that include internal currency and instant payments with no Finance or invoices involved, etc. As a result, it’s as simple as shopping on Amazon.com. However, to make this happen, we’re back to the necessity for a single digital standard in Procurement.
I’m not a technical expert, but it’s quite obvious that we can apply a sort of API technology that would ensure data exchange and interaction in the market. At first thought, it can be structured in about seven channel blocks: products, services, payment, etc.
Also, the result we should aim for is to create an environment where suppliers can submit their offers using unified formats and the same digital channels, as long as it’s right. I mean, as long as this standardization process doesn’t lead to complete robotization of the industry. And then … who says it’s wrong?
@olegremizov
6-June-2017