Procurement professionals today find themselves increasingly overwhelmed by the wide variety of technology tools that are available. Unlike in the past where technological variety was limited, today’s professionals may easily fall hostage to the vendor choices of their IT departments. By tracing the past of procurement technology we are able to gain better insights into its future business benefits. Below is a look at the evolution of procurement technology from its humble beginnings during the internet bubble to today’s increasingly sophisticated offerings.Initial E-InitiativesTechnology in the areas of procurement and supply chain quickly developed during the internet bubble, which led to the creation of an offering that was fragmented in the marketplace. However, it’s only recently that available procurement technology has become satisfactory. In the early days, this technology sought to address the issues facing procurement such as placing more efficient orders and raising requisitions. Initially, e-initiatives focused on transactional processing including the automation of the purchasing process for high volume, low value item categories such as office supplies and MRO.It is here that traditional ERPs and new e-procurement vendors developed their value propositions. However, while there were real benefits, there were also limitations to their applicability as numerous categories could not be addressed through catalogues. Soon, enterprises began to realize the limitations of utilizing technology to achieve purchasing efficiency. Naturally, the next stage of technological investments would focus more on the upstream sourcing processes.E-AuctionsNew niche vendors and industry focused marketplaces emerged to serve this developing market, thereby leaving behind most of the existing ERP and e-procurement vendors. E-auctions were the initial functionalities that were marketed as they provided a quick return on investment, as well as a good story to tell business, one that was easily understood. However, the limitations of e-auctions would become evident fast, seeing as they only served to improve the negotiation phase, rather than boost the entire process of strategic sourcing. More importantly, the auctions cannot provide a long-term solution to the main issue of sustainability of savings.The current state of the economy continues to provide procurement professionals the rare opportunity to increase their sophistication and play a vital role in the navigation of their companies through these dire times. Professionals can go beyond the need for immediate savings and instead achieve competitive advantage for their business. To do this, they will require procurement technology that supports organizations in achieving the next step in procurement excellence.
The advantages of fibre-optic technology are well known. It is cost-efficient and flexible as well. The risk of signal interference is virtually non-existent. These advantages have made this technology a preferred choice for many industries. Learn where and how it is used.TelecommunicationsUndoubtedly, the fibre-optic technology has many applications in telecommunications. It is used for telephone communication and for connecting the computers within a network. It is preferred for its better performance and for providing more bandwidth.It is really easy to see the difference between the optic and other systems. When you have a telephone conversation with someone on the other side of the Atlantic, you will hear echo if the phones are connected via satellite. There is no interference when the signal is carried by the transatlantic optic cables.MedicineThe fibre-optic technology is used in medicine for both examination and treatments. The endoscope is a device which is based on this technology. It is used for the examination of the internal organs of the body. It is very thin and light and creates minimum discomfort for the patient while producing high-quality images at a super high speed.The laparoscope is another extremely valuable medical tool based on this technology. It uses a thin optical cable which enables the doctor to have a clear view of the formations which have to be removed during a surgery without having to make a big cut of the abdominal or pelvic area of the patient. The cut is tiny and this speeds up the recovery time greatly.Mechanical ApplicationsIn mechanics, this technology is also used for inspecting the internal parts of machines which are virtually impossible to get to without complex and time-consuming disassembly. Typically, the tools which are based on this technology are used for producing images of the welding of the pipes and engines of airplanes, space shuttles and cars. They help to save time, effort and money and to ensure the highest levels of performance and security as well.TransportationThe transportation systems are getting smarter because of the fibre-optic technology used in them. This technology helps for automatic traffic lights, message signs and even tollbooths. The fibres are used in the high-speed electric trains as well. They are the transmission medium for controlling the switching of power semiconductors within the convertors of the electrical motors.Last, but not least, the fibre-optic technology is now extensively used by the military thanks to the high effectiveness and high security which it offers. It is used in radar systems and missile launchers.
The use of technology to make decisions that relate to procurement must be complemented with human rationale. It is vital that procurement professionals focus on the process both before and after the award of a contract, and not just on the tendering process. Before IT departments go to the market shopping for procurement technology, they should receive feedback and support from the procurement department in preparing their written requirements. Time and important soft skills need to be invested in this process to guarantee positive results.Soft Skills & TechnologyWhen mixing procurement technology with soft skills, it is important to get the basics right. This requires:
A Common Operating Model – While it may seem tedious, moving to a form of automation is really worthwhile. This is because it will prove more cost-effective to run a business with a common operating model, rather than design your technology around different variables. It is important to keep regional differences as slim as possible.
Understand Your Spending – It is impossible for a procurement team to successfully operate without fully grasping their spending. Every enterprise needs to embrace technology that can help them understand their expenditure, such that the human element of the procurement team is able to use this to make informed decisions.
Segmented Supplier Base – Invest in procurement technology as a way of segmenting your supplier base, such that they receive varying treatment that is dependent on their segment.
Training – In order to help your employees to grasp the basics of procurement, it is important to offer a technology training program. This may include certain basics such as not revealing to the supplier what the company’s budget is.
Supplier Performance Management Program – Many organizations manage their employees’ performance. It is beneficial to also do this with your suppliers using procurement technology. For instance, host an annual conference where suppliers come to meet you executive team, thereby providing you with critical supplier feedback.
During the post-contract which occurs at the end of the process, it is important for procurement professionals to seek the very last drop of value they can get out of a contract. It is at this juncture that suppliers tend to get smarter as they realize that procurement teams have their processes for tendering and sourcing really tied together. Therefore, it is important for procurement professionals to ascertain that they are able to run operations smartly at both ends.