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Jun 5, 2020
Jack Grimshaw

Ivalua Finds That A Lack Of Digitisation Is Hindering

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Ivalua has released its findings of a worldwide supply chain, procurement, sales and finance business leaders survey, in which the state of collaboratio...

The study, which can be found here, has revealed that a lack of digitisation and a focus on costs in harming supplier collaboration, with more than three quarters (77%) of respondents admitting that cost dominates supplier selection for the majority of their sourcing projects, and a further 80% of respondents acknowledged that they needed to accelerate the digitisation of their procurement operations.

Forrester Consulting conducted the research, commissioned by Ivalua. Improved collaboration was found to be a priority for 77% of the respondents, whilst improved CSR was also identified by 41%. Increased margins are a top priority of 38% of those surveyed, and an accelerated pace of innovation was identified by 36%. These categories were selected as the highest priorities and top opportunities by respondents looking to unlock greater value through supplier collaboration.

The vast majority of respondents (90%) believe that they have improved collaboration with most strategic suppliers, with 91% improving collaboration with their broader supply base in the last two years. A number of areas still need to be improved, however.

42% had no mechanism in place for a significant number of organisations to collaborate effectively with the broader supply base, finance (41%), IT (40%), or their most strategic suppliers (39%).

The research highlighted notable geographic differences:

50% of German business had no processes to collaborate with strategic suppliers, compared to 45% in the US and a third (33%) in the UK

48% of US businesses and 44% of German businesses had no processes to collaborate with the broader supply base, compared to a third (33%) of UK businesses

Just 38% of German business leaders believe that procurement is seen as a key business partner which contributes significant value, compared to 86% in the US and 82% in the UK

“Most procurement departments are taking steps to improve supplier collaboration, but supplier selection is still dominated by cost, and businesses are struggling to work strategically with suppliers,” explained Alex Saric, Smart Procurement Expert at Ivalua.

“As firms increasingly rely on suppliers to help them keep up with the growing pace of innovation and to adapt during crises such as COVID-19, they need be building stronger relationships. If organisations don’t establish themselves as a customer of choice now, they will be at a significant competitive disadvantage as in-demand suppliers pick and choose who they work with and prioritize.” 

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