Procurement’s digital transformation imperative

This paper analyses how the procurement function is adopting and
deploying digital technology, including the drivers behind
digital transformation, expected investments in the coming year
and the obstacles and pitfalls ahead. Building on the
foundational insights presented in the first paper in this
series, which explored the key priorities and challenges facing
the procurement function as a whole, this report takes a
forward-looking approach to understanding investment in, and
adoption of, various technologies in the next 12-18 months.

To inform the analysis, Economist Impact conducted a global
survey of 500 C-level executives across organisational
functions, including chief financial officers (CFOs), chief
operating officers (COOs), chief procurement officers (CPOs),
chief supply chain officers (CSCOs) and chief human resources
officers (CHROs). The survey explores procurement’s technology
priorities, with an added focus on the role of emerging
technologies and external workers in advancing the procurement
function’s mandate in 2023 and beyond.

Digital technologies are playing an increasingly significant
role in helping the procurement function to improve efficiency,
create value for the business, and raise performance in emerging
and important domains like environmental, social and governance
(ESG) reporting.1 From user-friendly interfaces for suppliers
and internal teams to AI-powered scenario modelling and decision
support, contemporary digitalisation and analytics tools and
data are an asset to a function that is buffeted by significant
headwinds, including the pandemic, inflation and fraught global
supply chains.

With procurement’s evolution from being mainly a cost centre,
coupled with rapid developments in digital technology, it is
imperative to understand the strategic, organisational and
technical foundations required to achieve successful deployment
of these technologies. This paper explores the emerging use
cases for technologies, especially AI and advanced data
analytics, while also analysing different risks and challenges
to successful integration.