What is digital continuous improvement for procurement?

continuous improvement
March 24th, 2020
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The Hackett Group highlights a new concept in one of its recent papers — digital continuous improvement. Falling somewhere between smart automation and advanced analytics, discover a new perspective on continuous improvement—the next step for creating value in procurement.

How will procurement create value in the future?

In the next five years, procurement departments will be well under way with their digital transformation and should be in a position to deliver greater value to the organisation.

For example, they will be able to:

  • Eliminate and/or automate certain routine processes such as accounts payable and order processing.
  • Use cognitive capabilities to predict activities, suggest opportunities and recommend strategy.
  • Use data and advanced analytics to improve compliance and save money, which will have a direct impact on profits.
  • Use technology to predict disruptive events to the supply chain, allowing the organisation to better plan for and limit disruptions.

With these advances, procurement departments will be able to significantly improve their efficiency and effectiveness, as well as increase satisfaction among stakeholders. Beyond simply reducing operational costs, procurement departments will become strategic advisors to their organisations.

How does continuous improvement work in a digital context?

In the digital era, continuous improvement opportunities primarily seem to be based on a combination of smart automation tools and advanced analyses.

Automated processes are a continuous source of data which is the lifeblood of analytics. Furthermore, the higher the quantity and quality of this data, and the more varied it is, the more relevant the analytics will be. In turn, this gives procurement departments a better understanding of the market and allows them to build predictive models. This information ultimately results in better process execution and improvements to operational performance. Founded on new technologies, this virtuous cycle embodies the concept of continuous digital improvement.

Diagram of digital continuous improvement.

As you will know, digital continuous improvement will go hand-in-hand with the development of new technologies over the next few years to reinforce the strategic role of procurement departments and create greater value for the entire organisation.

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