SA procurement is going digital, but for many their processes are not ready for it

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DigitalProcurement_200.jpgA good number of South African organisations find themselves in precarious positions when it comes to procurement because they have yet to properly integrate their basic processes and their weaknesses have become more evident during a time that limits peoples' movements and physical contact.

The global COVID-19 pandemic has changed almost every business process and for procurement, it has exposed the need to improve existing processes and pressured organisations to incorporate digital solutions as remote working has become a norm for the foreseeable future.

In a recent survey conducted by software development company Oxalys South Africa, in partnership with the Chartered Institute of Procurement and Supply (CIPS) and Smart Procurement, entitled: Post Covid-19: Procurement Key Priorities and Challenges in the Digital Era in South Africa, it was established that although there might be a lack of maturity in the South African procurement space, there is a real will to make it a strategic function, especially in the wake of the challenges brought on by the pandemic.

In fact, many South African organisations have not shied away from adopting digital solutions to streamline their business processes. It is a trend procurement must follow because current and future circumstances continue to demand automation for improved processes.

However, South African organisations must adopt the right path and a practical solution to digital procurement.

Going digital does not fix all...

A key finding of the survey is that South African organisations have a poor understanding of what digital procurement is, with some assuming that simple applications like Excel spreadsheets are enough, and others implementing complex and costly ERP solutions.

"Procurement processes within most South African organisations are not fully optimised. Before any of them even consider adding a digital solution to their existing model, they must ensure that they have taken care of the basics first," comments Stacy McTavish, Head of Supply Chain COE at Dimension Data Middle East and Africa.

Essentially, digital procurement is an enabler of optimised processes. A digital process gives organisations access to large amounts of previously inaccessible data, which has the potential to help them overcome various challenges brought on by the global pandemic. However, having access to large amounts of data from flawed processes will be of little help.

When considering a digital procurement solution, firstly invest in the right talent and technology, then efficiently handle the change management process. This will require boosting internal communications at all management levels and beyond that - this means involving all business partners in the project.

"With a lot of large organisations still operating in silos, owing to legacy issues that have created disparate processes within them, change management will play a critical role in making sure that the migration to digital procurement solutions is relatively seamless and all parties involved buy into the new way of executing procurement processes," comments Anne-Emmanuelle Grené, Head of Oxalys South Africa.

The objective behind greater communication and proper onboarding processes of internal business partners is to ensure better understanding of the role that procurement plays in any organisation; and this ultimately can lead to this strategic function becoming a shared performance driver. The survey findings agree, with 54% of respondents strongly believing that procurement departments are effective and are viewed as strategic business partners.

...but it is the way forward

"Digital procurement solutions are proven, reliable and accessible for implementation and have also shown tangible results within three months, in many regions around the world," says Grené.

About 43% of South African organisations have not yet started on their digital procurement journey and 38% of the survey respondents still mostly rely on Excel spreadsheets for automating their procurement processes. However, 80% of the respondents who said they have implemented digital procurement solutions, have reported improved efficiencies such as better visibility and transparency of processes, reduced cycle times, and better cost control.

Even before the pandemic disrupted the world, the move to the digital way of executing most business functions was already on the cards for many South African organisations, so the current circumstances have just increased the need to do it quicker, says Grené.

In fact, 80% of the respondents in the survey estimate that their organisations will adopt a digital procurement solution in less than three years' time.

Conducted between October and November 2020, the survey engaged 222 respondents who were procurement professionals and influencers (President, CEO, General Manager, CIO, CFO, CPO, head of procurement, buyer, project manager, analyst and specialist) from organisations employing between 50 and 1000 people and with annual revenues ranging from under R1-billion to R10-billion. The survey respondents came from a range of sectors in the country that include Manufacturing, Energy and utilities, Construction, transportation and logistics, ICT, Media and Communications, Retail, Financial Services, the Public Sector and NGOs.

For more information on the findings of the survey, you can access a summarised version of the report: https://www.oxalys.com/wp-content/uploads/summarised-report-oxalys-south-africa-procurement-survey-2021.pdf

The webinar recording is also available: https://www.oxalys.com/za/thank-you-webcast-procurement-survey-outcomes-presentation/

Oxalys is a global software vendor that has a South African-based subsidiary with a focus on procurement and is the preferred partner for mid-sized and large organisations from all industries in more than 25 countries around the world. With more than 30 years' experience in the digital procurement solutions space, Oxalys' solution helps organisations digitise the entire spend and procurement process: sourcing and contracts, purchasing and invoices, supplier relations and procurement steering. For more information, please visit: www.oxalys.com/za

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