Facing a macroeconomic outlook
As the year progresses, we continue to function amidst a deteriorating macroeconomic environment. This is significantly impacting the way finance and procurement teams operate, the challenges they continue to face, and the trends that are emerging. Influenced by factors such as inflation, gross domestic product (GDP), employment rates, average spend, and monetary policies, this economy can be a difficult one to keep up with.
But what does it mean for procurement teams specifically? With the rapid pace of technological change, procurement is no longer seen as the function that simply buys goods and services at the lowest possible cost. Procurement teams now hold much more strategic value and drive far more analysis to help businesses make informed decisions around their operations. As we look ahead to the remainder of 2023 and beyond, four key priorities are emerging in the procurement landscape; improved visibility of spend, automation, greater collaboration, and better compliance.
Improved visibility of spend
The first priority for procurement in 2023 is improving visibility of spend. To make informed decisions, procurement professionals need a clear understanding of where money is being spent, on what, and with who.
Technology can greatly enhance spend visibility. Sophisticated analytics tools will gather and analyse spend data from various sources, providing insights into spending patterns and trends. These insights can help procurement teams to identify cost-saving opportunities, negotiate better contracts, and reduce maverick spend.
Continued reliance on manual processes is not only time-consuming, but it is also ineffective and increases the level of risk in your organisation as a result of human error. By automating routine tasks like purchase order creation and invoice processing, procurement teams can save time, reduce errors, limit the risk of fraud, and focus on more strategic activities.
Robotic Process Automation (RPA) and Artificial Intelligence (AI) are two technologies that can drive procurement automation. For example, RPA can automate repetitive tasks, while AI can intelligently categorise spend data and predict future spending trends.
Greater collaboration (both internally across different departments and externally with suppliers) is essential for business success. Effective collaboration can lead to better decision-making, improved supplier relationships, and ultimately, better procurement outcomes.
Technology can facilitate collaboration by providing platforms for communication and information sharing. For instance, Cloud-based procurement solutions can enable real-time collaboration among team members, regardless of their location. Supplier portals and slicker supplier onboarding processes can improve communication and transparency with suppliers, leading to stronger, more productive relationships.
Finally, enhanced compliance is a top priority for procurement teams in 2023. Non-compliance with procurement policies and regulations can result in financial and legal penalties, reputational damage, and other consequences that can negatively impact organisations.
Technology supports compliance in several ways. For example, e-procurement systems can enforce purchasing policies by restricting unauthorised purchases. Contract management software can alert procurement teams about upcoming contract renewals or non-compliance issues. Governance platforms can enable unconscious compliance within your organisation, through automated rules and regulations that are built into every process. Additionally, analytics tools can identify patterns of non-compliance, enabling proactive measures to prevent future breaches.
The benefits of technology in supporting procurement priorities
The use of technology in procurement offers numerous benefits. It enables procurement teams to gain deeper insights into their spending, automate routine tasks, collaborate more effectively, and ensure better compliance. By leveraging technology, procurement professionals can transition from a transactional role to a more strategic one. They can focus on activities that add value to the organisation, such as considered sourcing, supplier relationship management, and risk management.
As we move through 2023, finance and procurement teams should understand there is a need to prioritise improving spend visibility, automation, collaboration, and compliance. A difficult economy doesn't change these priorities; it simply amplifies their importance. It makes it vital for organisations to improve their internal processes. Technology plays a major role in transforming procurement teams into a strategic function. With the right solutions in place, they can drive efficiency and cost savings, while playing an active role in navigating their respective organisation through challenging economic times.
Get in touch today to learn how we help finance and procurement teams to address emerging trends, with our Spend Management, Data Automation and Advanced Financials tools. Visit Spend Management Software Solutions | Advanced (oneadvanced.com).