Accenture calls for action on the digital procurement revolution
Kristin Ruehle, Accenture’s Global Procurement Business Process Services Lead, talks us through the company’s roadmap for the ‘The Next-Generation Digital Procurement’
Accenture is a company passionate about digital procurement.
In a recent report, the global management consultancy made no bones about the disappointment it feels at what it perceives as an almost industry-wide failure to embrace the technologies available for digitising procurement. It states that “procurement organisation has been largely left behind in the digital revolution. That needs to change.”
The report looks at how bots can be used to automate and streamline manual or routine procurement tasks, how making use of available expertise such as speaking to buying agents and advisors will help people make the best purchasing decisions and deliver optimal value to the business.
Accenture specialises in helping procurement companies to digitise their business operations, and the report shows confidence that the familiar frustrations surrounding procurement today will give way to a simple and intuitive buying experience for users to enthusiastically embrace.
Kristin Ruehle, Global Procurement Business Process Services Lead at Accenture, happily outlined the reasons behind the report and why she believes the future of procurement is “truly digital”.
“We published the report to help cut through industry buzzwords to help businesses understand how next-generation capabilities can transform their procurement organisations,” she explains.
“Businesses are not standing still. They are transforming in unsuspecting ways by selling new and different products and services and delighting their existing client base while creating relationships with entirely new markets and new buyers.
“Procurement is a fertile ground for growth in the digital age – but not in its current form. By digitising procurement and operational capabilities and enabling new digital business models, any company is capable of cutting new ground and making the wise pivots necessary to ultimately become a fully digital business.
“The benefits of digital procurement are clear. Firstly, digital improves the buying experience. Through digital, procurement organisations can create an intuitive buying experience for employees, increasing control and ensuring corporate spend is going to preferred suppliers.
“Secondly, digital procurement enables a data-centric approach to procurement. By looking beyond basic data, such as what was purchased and at what price, and seeking data from outside the organisation, procurement gains contextual insight into buying processes which can improve future decision-making. Procurement teams able to collect data in this way can also use it as fuel for emerging technologies such as AI, natural language processing, analytics and bots.
“To help customers transform to digital procurement, Accenture has made significant investments to enhance our internal capabilities. This includes investments in a proprietary digital platform that captures project data; applications that turn data into actionable insights; advanced automation and RPA (robotic process automation) bots that efficiently connect our experts and execute process steps; and analytics that uncover new insights from outside the organisation to inform decisions.
“As the report sets out, it’s difficult to achieve a successful transformation if you only focus on piecemeal solutions, such as analytics or AI. The key is to look at the full picture and leverage technologies in a unified way.”
In the report, Accenture has outlined its own vision for the future, which it calls the ‘The Next Generation Digital Procurement,’ based on 18 years’ experience of working across hundreds of clients in all industries and regions.
Research figures from the Hackett Group indicate that 84% of procurement organisations believe digital transformation will fundamentally change the way their services are delivered over the next three to five years, while Accenture’s own research has revealed that 85% of executives plan to invest in AI over the next three years, with the technology set to become a critical ingredient of digital procurement.
AI has the potential to boost productivity by up to 40% by eliminating repetitive tasks and supporting people in complex and creative problem-solving. Ruehle is confident that by embracing digital procurement as well as the other new technologies available, the supply chain industry as a whole can thrive.
“Digital procurement will fundamentally change the nature of the supply chain industry,” she asserts. “By improving how goods and services are purchased and increasing insights into spend, digital processes and technologies will help supply chain organisations better mitigate risk and meet compliance requirements.
“Additionally, the insights gained through digital procurement will support corporate objectives and sustainability goals and fuel product and process innovation. From an end-user experience perspective, supply chain professionals can expect to benefit from a more intuitive buying experience and accelerated buying processes.
“In a nutshell, digital procurement means more efficient, effective and transparent procurement processes that are based squarely on big data insights.”
One of the key facets of a fully-digitised procurement organisation is eProcurement software, solutions which support the purchase and payment of supplies, work and services through the internet.
“There are several benefits that stem from using eProcurement software,” Ruehle continues. “From improving visibility into spend, increasing productivity and accelerating transactions, to standardising the buying process, reducing errors, and increasing compliance. As such, eProcurement software is a core foundation of digital procurement, but is not sufficient in itself to truly transform procurement functions.
“Often, these software solutions are focused on enabling a process and can feel cumbersome for users outside of procurement and they lack inherent AI capabilities. The Next Generation Digital Procurement demands tools to work with and around eProcurement, especially when it comes to integrating data silos across the organisation to improve analytics and fuel automation.
“We advise businesses to leverage eProcurement solutions to provide appropriate guidance on the execution of the procurement process. This should include guidance on the supplier, price and channel.
“Businesses should also leverage the solution to ensure control and visibility. The key is to leverage eProcurement software to simplify processes. For example, ensure you don’t need five approvers for a small dollar request, and nor should you treat every category of spend and spend amount as the same.”
This all seems to make sense as Ruehle says. Where is the hold-up coming from, then, in terms of the industry becoming fully self-actualised in optimising digital procurement?
Well, Accenture research has also shown that procurement is something of a laggard when it comes to digital transformation, with companies today least likely to use analytics in procurement in relation to other functional areas, at only 40% as opposed to 59% use of analytics in finance and 55% in customer service.
Rather than looking at the negatives, however, Ruehle’s enthusiasm remains unabashed as she underlines the possibilities that this presents for companies.
“For me, this highlights a significant competitive opportunity. Organisations that start implementing digital procurement today will have a much more efficient and effective procurement operation than their competitors.
“Businesses should start investing today if they’re going to be prepared to be digital. Next Generation Digital Procurement requires wholesale change – it can’t be achieved by flipping a switch. As businesses move forward, there are three key considerations to bear in mind.
“Firstly, transformation takes time. Companies need to collect the relevant data, develop the necessary systems and processes, and build the underpinning analytics and AI to ensure they have in place a procurement operation that’s fit for the future.
“Secondly, it takes real investment. Fortunately, digital procurement capabilities are increasingly available as a service, which could reduce upfront investments and accelerate transformation.
“And finally, transformation takes vision. This is a big departure from how procurement has traditionally operated. An internal champion within the company must define what the future procurement organisation will look like and how the company can make it reality.”
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”