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Technology is a bit of a buzzword in procurement at the moment with many functions professing that they are working towards digitising their supply chains. But, according to some new research, many of the world’s largest organisations remain stuck in the dark ages.
Research from cloud-based platform supplier GT Nexus and Capgemini Consulting found that almost half (48%) of large global manufacturers and retailers were still choosing and using traditional technology such as phone, email, and even fax to communicate with suppliers.
This is a worry given that such technology, especially faxes, do not allow for easy and efficient storage of information surrounding supplier contracts and other important information. All this at the same time as robotic automation, cognitive procurement as well as new and improved P2P platforms are touted as the next big technology developments, which lots of people say they will utilise.
The question is why aren’t businesses migrating quickly over to these new technologies?
The introduction of a new technology can pose more risk to the company when it is done for the wrong reasons. Running a simple tick-box exercise of getting the latest innovations in place ahead of competitors runs the risk of investing for the sake of it. This can lead to staff being left in the dark as to how to use it, stakeholders confused and encumbered with unwieldy processes.
Outside of this there is a strong chance that suppliers themselves might not have the capabilities to plug into new technologies. Indeed, according to statistics reported by UK newspaper The Daily Telegraph, a staggering two-thirds of all small businesses in the UK, with no more than five employees, have zero digital presence. There, of course, should be some slack cut to SMEs because of many their budgets simply won’t stretch to the latest supplier management platform.
But, ignoring these technologies can also increase risk.
Part of the recent struggles experienced by firms in the energy sector has been blamed on their failure to embrace supply management platforms and cloud-based solutions. Web-based platforms create a closer relationship between businesses and their suppliers, encouraging real-time communication across the four corners of the globe and greater visibility of their supply chain.
Meanwhile, obsolete technology results in opportunities being lost and investments going to waste, and this poses a significant quality risk to businesses, according to Procurement Leader’s recently published research report, Supply chain risk: The hidden cost of the human factor (available to members).
“Although some companies realise the impact of data and have implemented technologies they either lack the capability to properly operate them or the technologies are not tailored to their needs,” one procurement chief told me this week in a response to the research.
Despite all of the innovations out there, the reality of digital supply chain management is clearly still a long way off for many businesses. To mitigate risk though, companies must commit to innovating and driving change in a real sense, and not simply just to be able to say they’ve done it.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.