Technology in procurement: The limitations and real-world impact

Supplier management service vital for businesses

There are still crucial parts of the procurement function that rely on “soft skills” and people doing their jobs properly. 

Here’s why I think so:

How many times have I heard this in the last 20 years: “Software or technology solutions streamline your processes, cut operational costs, save you time, improve compliance, transform your procurement,”etc.

These statements are the highlights of any procurement convention, conference, or internal discussion at a company trying to cut costs, manage changes, improve, or achieve operational efficiency – whatever else they call it.

Don’t get me wrong, I absolutely agree with these statements. However, software solutions in procurement are not a silver bullet.

There’s a catch: software cannot “think outside the box” and operates only within a preset framework with little or no flexibility.

If your basics and foundations (i.e., the preset framework) are not solid and done right, your issues will cascade through the entire procurement process to the end.

In other words, technology will ensure that poor processes are followed to their end.

This is a procurement nightmare!

Believing that technology will remedy your procurement issues…

I believe the basics and foundation lie in Sourcing. This function filters all your data that will later be used by your software/technology. Consequently, if you, for whatever reason, struggle with sourcing, you’ll end up with the old IT axiom: “junk in, junk out.”

Now, there are AI solutions that can assist with sourcing. They mostly help you generate leads, find suppliers, prescreen potential suppliers to detect anomalies and patterns, etc., thus relieving you from some of the time-consuming tasks involved in sourcing.

However, these AI solutions are currently very expensive, making them out of reach for small and medium-sized businesses. Plus, they assume that you have done your homework and have solid foundations and basics in order within your procurement process. AI can’t strategize, negotiate, build relationships, or make decisions for you.

I strongly believe that sourcing will remain a people-centric and labor-intensive task. It will require time, patience, focus, and involvement from procurement professionals, at least for the near future.

Recognizing these real-world situations as symptoms that something isn’t right in your procurement process is crucial.

It’s important to understand that these issues directly impact your business’s competitiveness, focus, and risk management.

So, before you make your next advance payment to a so-called supplier, place your next phone order to your “friend,” get excited about how cheap you bought it for, or try to recall how your “major supplier” looks like and what is their name, please read my blog and consider this: Any actions you take in procurement directly affect your profits.

Don’t let these issues hold you back!

Besides we are HERE to help.

P.S. The opinions in this blog are mine, and mine alone, based on 20 years of no-nonsense approach to procurement. You don’t have to agree, and you are welcome to disagree. 

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