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How technology is reshaping the procurement industry

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The sourcing industry has undergone a transformational shift over the past few years as technology continues to disrupt traditional procurement practices. The arrival of e-commerce and the integration of automation, Artificial Intelligence (AI), and cloud-based sourcing has created a new sourcing landscape that is faster, more resilient and efficient, and more responsive to market changes

By Minesh Pore

One significant change that technology has brought to the sourcing industry is the increased use of automation, which has streamlined and integrated disparate procurement processes, making them faster and more efficient. When combined with AI, modern algorithms are able to identify trends and patterns from analysing large amounts of data that can inform better purchasing decisions – reducing costs and timelines, and boosting quality and reliability.

This also improves supplier relationships, leading to better outcomes for all stakeholders. According to global supply chain consulting firm GEP, the adoption of AI technologies for procurement processes is set to reach a market size of $2.7 billion by 2027.

In addition to automation and AI, e-commerce and online marketplaces have also transformed the sourcing industry. Online marketplaces have made it easier than ever for businesses to source products from all over the world, find new suppliers, compare prices, and order products with just a few clicks.

The use of online marketplaces also offers greater transparency in the sourcing process. When suppliers are rated and reviewed by previous buyers, businesses can make a purchase or partnering decisions with more confidence. This increased transparency helps ensure that businesses get the best possible products and services at the best possible price.

According to a report by Grand View Research, the global procurement-as-a-service market size is projected to reach USD 14.6 billion by 2028, growing at a CAGR of 7.4% from 2021 to 2028.

Big Data Analytics is another technology that is revolutionising the sourcing industry today. By analysing huge amounts of data collected from multiple sources, buying businesses can gain valuable insights into internal and external sourcing patterns, supplier performance, and market trends.

By using advanced data analytics, these businesses can then identify areas for improvement and optimise their own procurement processes, or make better purchasing decisions. For example, s can help identify potential supply chain disruptions, allowing businesses to take proactive measures to mitigate risk. A recent study published in PLOS One found that the use of big data analytics in procurement processes can lead to significant cost savings for businesses

A study published in the International Journal of Physical Distribution & Logistics Management noted that the use of digital procurement platforms can help reduce procurement costs and improve supplier performance. Digital procurement platforms have emerged as a technology that has had a significant impact on the sourcing industry. These platforms provide a centralised location for businesses to manage their procurement processes, from supplier selection to purchase order management. By using a digital
procurement platform, businesses can save time and money while improving the overall efficiency of their procurement processes.

Finally, cloud-based sourcing has emerged as a trend that is transforming the sourcing industry. World Economic Forum notes that the global market for cloud-based procurement solutions is expected to reach $6.8 billion by 2025. By using cloud-based sourcing, businesses can access procurement data and processes from anywhere, at any time. This can help streamline procurement processes and improve collaboration between procurement teams, suppliers, and other stakeholders. Cloud-based sourcing also offers greater flexibility, allowing businesses to scale their procurement processes as needed.

Finally, the COVID-19 pandemic dramatically accelerated the adoption of cutting-edge technologies in the sourcing function. The pandemic disrupted supply chains worldwide and forced buyers from around the world to adapt quickly to changing market conditions. In fact, global consulting firm EY said in a recent report that many businesses are investing in digital technologies to help manage supply chain disruptions caused by the pandemic.

In conclusion, technology has rapidly transformed the way companies source and procure goods and services in just a few years. These technological advancements have brought significant benefits to businesses, including cost and time savings, improved supplier relationships, and increased transparency.

As the world continues to evolve and new technologies emerge, the procurement industry will also have to continually evolve and adapt in order to stay ahead. Procurement professionals must be agile, innovative, and open to change if they want to stay ahead of the curve and maximize their value to the organization. In turn, business organizations that are quick to embrace evolving technologies into their procurement strategies will be better equipped to not only overcome future supply chain shocks, but also drive business growth and succeed in the ever-competitive global marketplace.

This article first appeared in Images Group’s Phygital Magazine May-June 2023 issue 

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