Global supply chain disruptions triggered by the pandemic have made procurement leaders acutely aware of the need to closely monitor existing contracts, and supplier relationships.
At the same time, the limitations of manual contract processes have become painfully apparent to many. As we approach the start of 2022, organisations are realising that a digital and end-to-end approach to contract management are key to competitive advantage. Automated contracting solutions inject speed and agility into the buying motion, while also reducing risk—particularly for organisations with complex document workflows.
To better understand the challenges and opportunities today's procurement leaders are facing, ProcureCon Europe recently surveyed 100 senior executives. In its subsequent benchmark report, Focusing on Contracts, Balancing Performance, Innovation, and Unlocking Value Through Data, it's clear that there are three main opportunities for procurement professionals in today's environment: contract-centricity as a procurement driver; balancing performance and innovation in your procurement team; and unlocking value through data.
Let's look closely at these findings and what they mean for your procurement and contract needs.
Contracts As a Procurement Driver
The first opportunity outlined in the benchmark report is the power of contract technology to drive procurement outcomes. A flexible contract infrastructure can support scalability across a range of environments. Contracts are the ultimate output of any supplier negotiation, and by managing the entire source-to-contract process on a single platform, companies report significant outcome improvements.
End-to-end digital contract management eliminates slow-moving manual processes, with automation driving greater efficiency and overall contract quality. For example, some of the respondents in the report are developing a digitised guide of their contracts, providing oversight and immediate control of contract management processes while empowering buyers to self-service supplier agreements.
Little surprise, then, that innovative technologies that promote automation figure highly in the plans of the majority (61%) of survey respondents, with those companies aiming to improve supply chain resiliency in the next 12 months. Other procurement leaders are looking to artificial intelligence (AI) and business analytics tools with natural language processing (NLP) capabilities to review and analyse large numbers of documents, helping to quickly identify outdated or risky contract terms and clauses. Still others are looking to blockchain to increase the stability, intelligence, and success of procurement management.
Balancing Performance and Innovation in a Procurement Team
The second opportunity highlighted by the benchmark report is the rewards awaiting procurement teams that invest in innovation.
In a post-pandemic economy, procurement leaders and their teams will need to drive higher returns on investment, but also keep a focus on innovation to keep up with advancements in technology and customer expectations. It's little surprise that, in many organisations, procurement is being tasked with the management of digital transformations.
To achieve this balance between performance and innovation, a large majority (70%) of survey respondents are using data for systematic financial, political, and operational risk management. The top three procurement areas respondents are applying innovation are: supplier relationship management, payments, and contract management.
With Contract Lifecycle Management (CLM) technology, procurement organisations can simultaneously achieve immediate value, while also laying the foundation for innovative approaches to contracting in the future. Another report predicts that contract negotiations will get 30% faster due to advances in technology. That only hints at the benefits that come with investing in innovation today.
Unlocking Value Through Data
The third opportunity highlighted in the benchmark report is the potential for unlocking value through data.
Poor quality or insufficient data are major challenges to converting procurement from a cost center to a source of value for the enterprise. Historically, available technology has been unable to deliver relevant information and actionable insight into how the procurement department operates.
But today, data visualisation can paint a clear picture of where and how money is being spent and can identify where additional value may be had. Fully 27% of survey respondents said their organisations are using data to reduce costs to their procurement team.
Predictive and real-time analytics are empowering procurement leaders to better manage their supply chain partners, capture early payment discounts, and explore innovative products and techniques. Analytical insights enable data-driven decision-making in key areas, such as enabling procurement to both anticipate potential delays or disruptions, and take proactive steps to avoid them. Frequent capture of information from IoT (Internet of Things) devices and sensors can greatly assist in this kind of pre-emptive strategy. AI and automation likewise help to overcome the limitations of manual data handling processes and prevent unnecessary delays in implementation.
How Icertis Can Help
To effectively manage risk in the supply chain in times of disruption, procurement leaders are now acutely aware that they must closely monitor existing contracts and clarify relationships with external parties. Procurement organisations are realising that a digital and end-to-end approach to contract management is key to competitive advantage and business continuity.
For the full insights from our survey of procurement leaders, download your free copy of the Icertis/ProcureCon Europe 2021 benchmark report, Focusing on Contracts, Balancing Performance, Innovation, and Unlocking Value Through Data,here.