COVID–19: Making Case for Digitalization in Procurement
Published on 28 Apr, 2020
Procurement, a key process, if affected adversely could result in a huge loss for the organization, especially in manufacturing. The current pandemic has unveiled the threats facing supply chain and how vulnerable it can be rendered. However, digitalization in procurement could help organizations to be better prepared.
COVID -19 has paralyzed industries and economies across the world. Due to lockdowns and sealing of international borders, the supply chain in various industries has been severely affected. Consequently, supply and productivity are likely to take a major hit. Moreover, dearth of human resources amid the outbreak has made it difficult to effectively manage the value chain. The pandemic, therefore, underscores the need to have a more robust supply chain management plan. Companies are strategizing on how to digitalize their procurement process to ensure efficiency even in times of crisis and emergencies.
Digitalization can help in:
- Real-time risk monitoring – Fast access to information helps in efficiently handling sudden disruption in raw material supplies. While risk could emanate from a multitude of factors, digitalization can help in understanding the exact causes and finding an apt solution or making an effective alternative arrangement.
- Data integration – Supply chain performance can be optimized by integrating data from customers, distributors, and suppliers in real time. This reduces lead time as well as cost of managing data manually, besides enhancing customer experience.
- Supplier management – With the help of big data analytics, unlimited financial and external data can be processed and accurate predictions can be made, providing a holistic picture of supplier-market-customer dynamics. Also suppliers’ financial stability can be ascertained.
- Automation – Processes such as ordering, invoicing as well as payment can be automated, reducing the need for manual intervention.
- Insights – Using advanced analytics, better insights on industry and marketplace can be generated, which could help in accurately predicting future events. If we look at the current situation, manufacturers using advanced techniques fared better than those who did not employ these tools. The former were able to access data and news on the spread of COVID-19 and take steps accordingly in advance.
The pandemic has made companies realize that eventually all will have to embrace digitalization. This will help them trim losses and ensure continuity of supply chain amid calamities.
Digitalization has several advantages, such as:
- Simplifying the process and making it error-free
- Automating repetitive tasks, hence reducing manpower cost
- Improving ROI due to increase in efficiency
- Facilitating better decision making by providing access to updated information
- Creating a flexible enterprise capable of quickly adapting to changes
Digitalization will help in navigating through uncertainties. It minimizes risks through efficient monitoring. While epidemics may be unavoidable, with the help of advanced digital technologies and techniques, they can be dealt with effectively.
