KPMG Backs Digital Ecosystems in Supply Chain Procurement

Digital transformation is changing the way procurement works across the supply chain.

In its 'Digital Procurement’ report, KPMG urges organisations to adopt a layered approach to sourcing and procurement technology, placing source-to-pay (S2P) platforms at the core of operations and integrating specialised digital tools to enhance decision-making, supplier collaboration and supply chain resilience.

KPMG’s report focuses on how data analytics, automation and cloud-based platforms are now key to streamlining procurement operations.

The firm describes how procurement can move beyond its traditional back-office role and become a core part of delivering strategic value.

Jon Hughes, Director and UK Sustainable Supply Chain Lead at KPMG, says the shift begins by rethinking how procurement is structured: “Today, the focus is on designing the organisation first – identifying how it needs to operate to deliver business objectives and outcomes – and then determining the strategy, pausing to consider the technology which can best serve the needs of the key processes, followed by selecting the right tools that will enable the most effective delivery.

“This forward-thinking approach ensures that technology supports a cohesive, tailored operating model, rather than dictating how procurement should work.” 

A layered model for digital procurement

KPMG recommends that businesses focus on a hybrid digital procurement model.

This starts with a core S2P platform – software designed to manage the full sourcing-to-payment lifecycle, including purchasing, supplier management, payments and contract management.

While the S2P system brings efficiency and standardisation, it must be complemented with high-performing, specialist technologies.

These additional tools should target specific procurement priorities, including managing cost, improving supplier performance, enhancing sustainability and reducing supply chain risk.

When connected into a unified digital procurement ecosystem, these technologies add insight and functionality, without creating data silos or complicating workflows.

A connected ecosystem also means a better user experience, more consistent data and easier deployment of automation and analytics.

For this to work, procurement teams must also focus on people and processes – ensuring their digital transformation strategy includes change management, training and a modular approach that can evolve with business needs.

Four strategic priorities for procurement leaders

To unlock the full benefits of digital procurement, KPMG outlines four core areas Chief Procurement Officers (CPOs) must prioritise:

Cost efficiency
Digital tools can deliver long-term savings by using data to predict trends, automate sourcing and contracting and enhance supplier relationships.

Supplier performance
Technologies such as machine learning, AI and blockchain are enabling procurement teams to address business challenges, find new suppliers and generate innovation in the supply chain. These tools improve transparency and accountability when it comes to performance management.

Sustainability
Digital procurement allows companies to track supplier behaviour, monitor environmental and social performance and choose suppliers who align with sustainability goals. With greater visibility into the supply chain, teams can reduce resource waste and make more informed sourcing decisions.

Risk management
Real-time data and advanced analytics give organisations a better view of potential supply chain disruptions. Digital procurement helps monitor supplier compliance and improve consistency through automation, reducing manual errors and strengthening resilience.

Jon adds: “Procurement is evolving. No longer confined to just source-to-pay (S2P) platforms, today’s procurement leaders are building integrated, digitised operating models that align with broader business objectives.

“The future of procurement isn't about solely optimising individual processes – it’s about creating a seamless digital ecosystem that connects every facet of the procurement lifecycle, from sourcing and contracting to supplier management and strategic decision-making.”

Did you know? Jon featured on the ‘Supply Chain Sustainability & Scope 3’ panel and delivered an engaging keynote presentation at PSC LIVE London 2024. 

Building a best-of-breed procurement ecosystem

To support procurement functions in identifying the best solutions, KPMG adopts a four-step method to build a best-of-breed procurement technology ecosystem:

Step 1: Desktop research
KPMG begins by scanning 11 technology categories and creating a shortlist of vendors that align with key business goals around supply chain risk, cost, sustainability and supplier innovation.

Step 2: Vendor demonstrations
These vendors then present product demonstrations so their tools can be evaluated for specific procurement challenges.

Step 3: Evaluation via scorecard
Using a balanced scorecard, KPMG compares vendors on criteria such as stability, innovation, cost-effectiveness and return on investment.

Step 4: Ecosystem formation
KPMG finalises a set of preferred tools that become part of a broader digital procurement ecosystem. These recommendations aim to support scalable, flexible procurement operations.

The report states that CPOs who embed these ecosystems into their operations will improve sourcing agility and procurement efficiency, while boosting supply chain resilience.

Digital transformation, according to KPMG, is not just about tools – it requires a shift in thinking.

CPOs must redesign workflows, invest in training and enable data-led decision-making across the supply chain.

Those who embrace a digital procurement model will help deliver wider business value in innovation, cost control and sustainability.

Jon concludes: “The future of procurement is about creating an interconnected, future-ready ecosystem – one that is designed for continuous improvement and agility. By embracing best-of-breed solutions, organisations can build a flexible and scalable platform that seamlessly integrates with existing systems, ensuring that procurement is always operating at peak efficiency.

“The key is to create a connected ecosystem where every application, every tool and every team is aligned toward a common goal: to drive sustainable growth and deliver unparalleled value.”

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