Drones, 3D printing, machine learning and artificial intelligence. Uber, SpaceX and Airbnb. We hear about disruptive technologies and companies every single day, but what kind of disruptions should procurement practitioners keep their eyes on? ProcurementIQ highlights three disruptions that our procurement experts are watching. While these disruptive technologies have been around for some time, they are expected to continuously change the lives of procurement professionals in the coming years.
The Internet of Things (IoT)
The internet of things is the interconnectivity of devices, smart homes and buildings, computers, vehicles and anything else that can be embedded with electronics to collect, exchange and track data. Consumers are already bene ting from wearables that track their activity levels, smart homes that turn down the lights and thermostat when no one is home and intelligent cars that alert the driver when service is needed. But how do procurement professionals benefit from the IoT?
There are countless ways the IoT can affect procurement, but one noticeable change is that the IoT is producing unprecedented amounts of data. This is giving procurement departments increased visibility into supply and equipment usage, and an understanding of exactly what is being used and when. With this information, you can more accurately anticipate your organization’s needs, leading to improved budget and contract management. Indirect spend categories like building maintenance, machine maintenance, travel and expenses are transformed as elements such as end-of-life cycles, repair schedules and expense reports are automated by the transfer of data directly into enterprise systems. This transformation allows procurement teams to save time and do more with fewer resources.
Continuing the theme of doing more with less, automation plays a huge role in helping procurement departments handle more spend with the same or fewer resources. Automating invoicing and purchase- to-pay is already well underway at many organizations. Other areas that departments should look at to incorporate automation include report generation, compliance monitoring, supplier relationship management, inventory management and financial risk management. While some fear that automation results in a loss of jobs, many see it as a way to reduce or eliminate tasks that require large amounts of manual work. Doing so frees up procurement employees to be more strategic and helps organizations become more efficient and value-driven.
Analytics & Big Data
The goals of many procurement departments include increasing credibility and becoming a trusted advisor in the organization. Analytics and big data can be key in achieving these goals. Companies are presented with the opportunity to gain insights and a powerful strategic advantage by capturing internal information (spend, contract and SRM data) and external data (supplier databases, financial information, economic indicators, etc.). The catch: big data is useless without smart, talented people available to analyze it. This is where the procurement department comes in. Organizations that can create new competencies based on changing technology, adjust plans and grow their general technology knowledge will be able to move beyond basic reporting and data access capabilities and start to use next-generation analytics, like predictive analytics and risk analysis. While a minority of procurement departments are doing this now, those that move in that direction may find themselves in the position of a highly trusted and influential department.
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