Innovation in Procurement: Making All the Right Connections on a Single Platform
Although the primary function is as old as the concept of “running a business,” procurement has maintained an existence rooted in making connections and establishing relationships. Seeking out the right materials from the most reliable suppliers at the best price has always been the goal. But as awareness of how every business in the supply network impacts each other continues to grow, so does the strategic – and innovative – nature of procurement.
Even French-Polish physicist Marie Curie (1867–1934) understood the need to innovate procurement practices. Her pioneering work on the theory of radioactivity won her many accolades, but the financial cost of radium – which became popular, after she discovered it, for therapeutic properties – was extraordinarily burdensome. Ultimately, her search for the right supplier led her to a chemical plant 18 miles south of Pittsburgh, Pennsylvania, approximately 3,898 miles away from her Paris home.
Considering Curie’s search was done long before the digital era brought us the Internet and business networks, we can only imagine the lengths she endured to find that one plant. She had to meet the right people and convince them to share their personal relationships, ultimately leading her to a supplier that she concluded, based on her analysis, to be affordable, reliable, and trustworthy.
Fortunately, modern-day businesses do not have to go through such an arduous process anymore. From direct and indirect spend to maintenance, repair, and operation services, the digitalization of procurement has streamlined the entire experience and increased visibility into the practices of suppliers that fulfill business needs.
Finding better ways to get things done
From indirect and direct spend to MRO and contingent workforce services, procurement organizations handle a wide variety of purchasing activities, most of which are highly complex in terms of the transaction, management, and compliance. And as their responsibility and influence expanded throughout the business, so have their portfolio of tools, data sources, and applications actively used to help ensure every buy is based on foresight and informed decision-making.
At SAP, we have observed many organizations evolve their procurement capabilities incrementally through well-defined digital transformation strategies. They are moving on-premise legacy systems and data to the cloud – usually one or two capabilities and applications at a time. Some are even going further by adopting analytics and machine learning and taking advantage of business networks to discover, connect, and engage millions of buyers and suppliers from more than 190 countries.
According to IDC, this progression is part of a transition toward a unified system of clouds, networks, and data centers to counter infrastructure costs and operational complexity. In fact, 75% of enterprises are expected to deploy such a landscape by 2022.
Yet, it is important to note that procurement organizations are undergoing this transformation with one critical caveat: the technology they implement must be 95% functionally fit, and no less. This is a good expectation; however, it can only be achieved with a platform that supports extensible and configurable solutions, integration enablement, and the addition of business intelligence analytics.
Unifying spend management with digital procurement
For many SAP customers, SAP Business Technology Platform (SAP BTP) is the key to attaining such a platform to achieve procurement efficiencies, such as:
- Creating new business processes or augmenting existing ones
- Innovating capabilities and customizations within solutions available through the platform
- Integrating SAP and third-party applications and data sources
- Designing flexible and simplified processes for sourcing, contracts, catalogs, requisitions, purchasing, invoice processing, and payments
- Embedding predictive analytics to provide visibility into spend performance, seek better alternatives, and identify new opportunities and risks
Take Henkel, for example. With operations in more than 120 locations worldwide, the global provider of leading chemicals and consumer products brands adopted SAP BTP to simplify, unify, automate, and standardize its source-to-pay process and increase spend visibility enterprise-wide.
With SAP BTP in place, Henkel is well–positioned to manage €14 billion in direct, indirect, and services procurement spend at the regional and business-unit level, while increasing savings, cash flow, sustainability, and operating performance. The platform provides lean, automated, and integrated workflows that speed up approvals and help ensure compliance and a guided buying capability that streamlines the purchase-to-pay process for buyers. Powerful analytics are leveraged to monitor key spend metrics and enable faster and confident decision-making.
Keeping pace with a changing landscape
For all the new challenges companies face today, procurement organizations have a unique opportunity to strategically impact long-term business success. And now, with access to platforms such as SAP BTP, it’s never been simpler and faster to gain that edge.
Optimize your business’s procurement processes to explore and choose products and services on your terms. Learn how by reading the IDC market spotlight, “Ignite Your Agile Enterprise: Five Key Trends to Future-Proof the Business in 2021 and Beyond.”
This blog post is part of a series on SAP Business Technology Platform, covering the following topics:
- Why Technology Completeness Matters to the Success of a Business Technology Platform
- How a Clean ERP Core Breaks the Code of Your Data’s Secret Language
- Digital Platforms Drive Innovation in HR to Deliver Trusted Employee Experiences
- How a Single Platform Turns Even the Smallest Projects into Big Outcomes