SAP Ariba's Marcell Vollmer: Digital transformation taking longer than expected
There is almost universal agreement that digital transformation will have a significant impact on all supply chain and procurement functions, but progress is perhaps slower than expected.
That’s the verdict of Dr. Marcell Vollmer, Chief Digital Officer at SAP Ariba, who recently spoke with Inside SAP about the key findings of the company’s ‘CPO Survey 2018: What’s the Next Big Thing in Procurement’.
Vollmer was commenting on the finding that 83% of respondents believe digital transformation will be impactful but only 5% of respondents have highly automated processes
“I think everyone agrees that digital transformation will heavily impact all the procurement, supply chain and finance functions. Eight-three per cent are absolutely convinced it will impact more in 2018 than in 2017.
“The follow-up question was, ‘Have you already highly automated your core systems to ensure that you can be ready for digital transformation?’, and only 5% confirmed with a clear ‘yes’.
“Sixty-three per cent are saying they have it on the roadmap, and driving more automation is a priority. It definitely indicates they see the change, they are now acting on that, but basically it takes a little more time than expected.”
Other key findings from the research found the following:
- Financial services, consumer products and retail have the least automation;
- IoT is the largest current technology trend but robotic process automation and artificial intelligence are the future;
- Analytics/data quality and budget restrictions are the largest roadblocks to achieving functional efficiency;
- Hard savings, cost avoidance and compliance are the top KPIs to measure procurement performance;
- 88% of respondents have purpose objectives defined for procurement and see the value; and
- Corruption and child labour are the largest purpose-driven risks managed
On the finding that IoT is the largest current tech trend, Vollmer said: “It was a little bit of a surprise that the Internet of Things (IoT) was rated number one as the most commonly used technology, closely followed by robotic process automation. It makes sense because the supply chain is using so many connected devices, so therefore IoT is definitely the technology for that.
“In terms of what technologies chief procurement officers are looking into now, the two most commonly nominated technologies are robotic process automation, and artificial intelligence (AI).”
5 Minutes With: Jim Bureau, CEO Jaggaer
What is data analytics, and why is it important for organisations to utilise?
Data analytics is the process of collecting, cleansing, transforming and analysing an organisation’s information to identify trends and extract meaningful insights to solve problems.
The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions. Spend analysis and other advanced statistical analyses eliminate the guesswork and reactivity common with spreadsheets and other manual approaches and drive greater efficiency and value.
As procurement continues to play a central role in organisational success, adopting analytics is critical for improving operations, meeting and achieving key performance indicators, reducing staff burnout, gaining valuable market intelligence and protecting the bottom line.
How can organisations use procurement analytics to benefit their operations?
Teams can leverage data analytics to tangibly improve performance across all procurement activities - identifying new savings opportunities, getting a consolidated view of spend, understanding the right time for contract re-negotiations, and which suppliers to tap when prioritising and segmenting suppliers, assessing and addressing supply chain risk and more.
Procurement can ultimately create a more comprehensive sourcing process that invites more suppliers to the table and gets even more granular about cost drivers and other criteria.
"The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions"
Procurement analytics can provide critical insight for spend management, category management, supplier contracts and negotiations, strategic sourcing, spend forecasting and more. Unilever, for example, used actionable insight from spend analysis to optimise spending, sourcing, and contract negotiations for an especially unpredictable industry such as transport and logistics.
Whether a team needs to figure out ways to retain cash, further diversify its supply base, or deliver value on sustainability, innovation or diversity initiatives, analytics can help procurement deliver on organisational needs.
How is data analytics used in supply chain and procurement?
Data analytics encompasses descriptive, diagnostic, predictive and prescriptive data.
Descriptive shows what’s happened in the past, while diagnostic analytics surface answers to ‘why’ those previous events happened.
This clear view into procurement operations and trends lays the groundwork for predictive analytics, which forecasts future events, and prescriptive analytics, which recommends the best actions for teams to take based on those predictions.
Teams can leverage all four types of analytics to gain visibility across the supply chain and identify optimisation and value generating opportunities.
Take on-time delivery (OTD) as an example. Predictive analytics are identifying the probability of whether an order will be delivered on time even before its placed, based on previous events. Combined with recommendation engines that suggest improvement actions, the analytics enable teams to proactively mitigate risk of late deliveries, such as through spreading an order over a second or third source of supply.
Advanced analytics is a research and development focus for JAGGAER, and we expect procurement’s ability to leverage AI to become even stronger and more impactful.