How to increase transparency through digital procurement
When used correctly, digital procurement platforms can serve as a “single source of truth” for both clients and suppliers. In this blog post, we take a look at what transparency in procurement means, potential obstacles encountered in achieving this transparency and, of course, how to overcome them.
More transparent procurement processes allow businesses to develop smarter solutions, deliver higher quality tenders, and minimise downstream problems both locally and globally. Companies that give potential suppliers real-time visibility of their procurement processes, from carrying out Market testing and issuing initial tenders, to collecting and assessing responses, are far more likely to make the right decisions, ensuring better results, value, and accountability for their projects.
What is transparency in procurement?
Full transparency means knowing every aspect of your supply chain inside and out to ensure a better and more reliable customer experience. According to Mark Miller, Program Manager Products at DHL Supply Chain (Americas), “It enables your supply chain to more effectively and quickly react to unforeseen risks, as well as changing customer and market demands. It can also allow you to make more informed business decisions when it comes to moving products and fulfilment centres closer to customers.” Furthermore, transparency in the supply chain ensures that processes and decisions can be scrutinised and evaluated, that decision-makers can be held accountable, and that procurement is open to healthier competition.
Why is transparency in the supply chain important?
The days when products could be tracked purely by spreadsheet, or partners managed and contacted by phone or email are over. These traditional methods make it far too easy for things to slip through the cracks as they are characteristically disconnected technologies used in isolation by individual partners. Real-time data and technology have moved on from being a nice-to-have to being a must-have. Generating granular, real-time, security-rich data about supply chains partnered with technology can drive intelligent workflows. As Jonathan Wright, Managing Partner, Service Line Leader at IBM Services, puts it: “It’s no coincidence that recent research shows that leading supply chain organisations use real-time intelligence 34% more often than their peers.”
Challenges to achieving transparency in supply chains
Organisations striving to increase transparency in their supply chains face multiple challenges, ranging from organisational to structural. In most cases, risks and problems are buried in the depths of the supply chain and, for many companies and suppliers, it is hard to assess the importance of these deficiencies and to decide whether or not the information should be disclosed. Transparency creates accountability for errors, and sometimes a lack of transparency is the more desirable option.
Cultural differences among the various parties along the supply chain also play a role and can prevent suppliers from feeding data and information into databases if an error-friendly culture does not exist. In addition, data and information transparency always carry the risk of disclosing business secrets, or copyright or confidentiality issues. Finally, data and information are usually available in vast and dynamic quantities in all companies in the supply chain, but organising this information in a meaningful way and deciding which data should or must be shared on the digital platform is a significant challenge.
How to achieve transparency in supply chains
According to The Hackett Group, “84% of procurement organisations believe that digital transformation will fundamentally change the way their services are delivered... Yet only 32% have developed a strategy for getting there.” Here we look at the three core points companies should consider in order to achieve transparency in their supply chains:
- Drive innovation-to-value with intelligent workflows
Apply an “inside-out” approach to digital transformation by combining data with robotics, automation, hybrid cloud, IoT, and edge computing. Integrate knowledge from external sources that provide weather, demand fluctuation, and other essential logistical data. Wright adds that "companies should start with implementing AI-driven solutions that integrate with their current state architecture to accelerate toward a digital supply chain; these can start adding value in less than a month.”
- Strive for autonomy through automation
Leave the “pen and paper approach” in the past. Take advantage of automated processes and self-learning software, and free up your resources to concentrate on strategic, operational tasks rather than tedious admin work.
- Impart agility with instant and transparent insights
Adopt agile operating models, which can provide up-to-the-second insights to an organisation`s workforce. These models are predicted to be a top competitive advantage.
Challenges will always exist, but the beauty of technology is that you can effortlessly filter out anything that can upset a supply chain. Once this digital platform is in place, you can achieve total transparency.
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