Accenture: Next Generation Digital Procurement
In this article, we take a close...
Five key elements to making digital procurement a reality
Through digital procurement, a company can significantly increase procurement’s speed, agility and efficiency. Digital procurement allows for better visibility, decreased risk and enhanced compliance - which will ultimately enable increased spend under management and more value for the business. Accenture has listed five important components to making digital procurement a reality.
Data is central to how a company predicts the needs of people, knows which goods or services are available to better meet those needs, determine which suppliers are the right ones and work out the right price to pay. In order to create a truly digital procurement organisation, companies should consider an intentional strategy to capture far more data internal and external than they do today:
Everything the organisation touches - not just in its sourcing process, but also in any process generating data that’s relevant to procurement and sourcing. This includes invoice and payment data to understand compliance with price and process, including process information, such as who approved a price variance and for how much.
Data outside the organisation, such as deep and broad category and market intelligence, which is sometimes even more important. Such data is vital to develop the greatest insight into the TCO or pricing levers the company can consider when negotiating an individual contract.
If data is the fuel for digital procurement, technology is its engine. By combining relevant data and these highly advanced technologies, a company can automate and enhance a range of activities and processes as well as going beyond simple automation to providing advanced intelligent support.
Intuitive user experiences
In order to fully benefit from the digitalisation of procurement, an organisation should offer an attractive, intuitive user experience that allows stakeholders to use the online procurement tools. The more people who use digital capabilities, the more effective they are in buying and the more data the organisation can collate in specific transactions.
Skills and talent
A digital procurement organisation must do more than just collect data and apply digital tools. Generating true value offers another key element, a cross-functional team of people with a unique set of skills:
Data scientists and AI experts who understand how to build and apply models to manipulate the data and tease out different correlations.
Category/business experts who can advise whether those correlations are significant or simply coincidences.
IT professionals who recognise the technology tools and software applications, as well as how to integrate them to create a solution to a problem that adds value.
Design professionals who are adept at developing compelling experiences that make stakeholders want to use the tools provided rather than find ways to avoid them.
New policies, procedures and operating model
Digital procurement provides all stakeholders - company employees and suppliers - with a new way to collaborate and interact, as well as greater access to more robust data and insights. An organisation should review its policies and procedures to ensure everyone understands their roles and responsibilities in the new procurement process and how they can make the most informed decisions.
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
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.”