A New Route to Spend Efficiency
Digital Purchasing is a new way of driving the efficiency of the purchasing function, when compared to traditional alternatives such as strategic sourcing and organization building. Through the usage of digital tools in purchasing, organizations can not only ensure an increase in performance, but also do so in a sustainable manner. Digital Purchasing can not only reduce costs, but also improve efficiency, ensure compliance, and enable management to make more informed decisions. These benefits can be leveraged by focusing on two aspects of digitization–implementation of a Spend Analysis tool and rollout of a Procure-to-Pay (P2P) process. While digital tools such as Spend Analysis provide CPOs with a significant payoff in terms of more clarity about where and how much the organization is spending, the P2P process streamlines the entire purchase process. For instance, Johns Manville, a manufacturer of building products, deployed a Spend Analysis tool, which helped it to rationalize suppliers, generating 10% savings. Spend Analysis tools enable CPOs to ensure compliance by identifying at-risk suppliers, therefore preventing a “white elephant” scenario. These digital tools enable a transformational change of the purchasing function.