Top 6 Trends in Procurement Technology
Technology has empowered business functions to improve productivity by optimizing business operations. The rapid strides with which digital technology is being adopted by businesses are transforming the way businesses operate. From finance to procurement to marketing – digital technology is empowering the teams with better control over the operations.
Changes in the Procurement Function
Procurement technology has advanced rapidly in the past 5 years. According to the latest market report, the Global Procurement Software Market was valued at 4.7 billion USD in 2021. It is expected to grow at a healthy CAGR of 10.17% to reach 10.2 billion USD by 2027. The factors driving the market growth are the increasing need for procurement process automation and the rapid adoption of e-procurement technology.
Digital technology has brought new capabilities to the procurement function by making strategic sourcing more predictive, vendor management more proactive, and procurement transactions more optimized. Digital procurement is changing the procurement landscape in many ways. A Deloitte Study on Digital Procurement – New Capabilities from Digital Technologies examines how digital technology has changed the procurement function. The study mentions that many organizations are implementing several forms of core procurement technology platforms. These platforms are often a combination of eSourcing, spend analytics, eProcurement, and contract management technologies. Procurement technologies that are built on SaaS platforms are quicker and easier to deploy.
The following digital technologies have entered the maturing phase according to the study.
Cognitive computing and artificial intelligence: Iterative machine learning and pattern recognition software is used to rapidly categorize unstructured data on the cost, spend, supplier and contract.
Intelligent content extraction: Unstructured documents like contracts, material bills, pricing tables, etc. are read using optical character recognition and other learning algorithms.
Visualization: The procurement data is transformed into user-friendly visual formats that organize information for deeper insights and faster and informed decision-making.
Sensors and wearables: Sensors that can detect and capture physical data are attached to goods for real-time tracking of inventory.
Collaboration networks: Procurement software platforms allow buyers and suppliers to have complete visibility into every aspect of the joint value chains.
Predictive and advanced analytics: Process modeling, machine learning, artificial intelligence, and statistics are combined with third-party data sources for predictive analysis of cost/price fluctuations and demand/supply scenarios.