The Rise of Digital Procurement

The COVID-19 pandemic has wreaked havoc on logistics and supply chain throughout the world causing disruptions to how business was traditionally conducted. Although this isn't the first time that the global business has been hit by a problem. Despite this, each crisis also brings along opportunities.

COVID-19, on the other hand, has forced the businesses to undergo a technological transformation that is expected to transform almost every industry. From retail, entertainment, and F&B, to healthcare, insurance, and other essential industries - everyone has already felt the heat to transform around the evolving consumer behaviour.

Technological advancements are all around us. They continue to modify our reality and assist us in improving our performance. We can say the same thing about technology in procurement, as it continues to streamline procedures, push limits, and change how firms and functions address supply chain issues. Specifically, in response to the fast-changing market and the pressures of the global health problem, advances in procurement technology utilization have taken a quantum jump. The COVID-19 dilemma has merely served as a spur for industries, speeding up the process of technology implementation.

The Post-Pandemic Normal: Bringing Digitization To The Fore

Consumers have shifted considerably to online channels during the pandemic, and businesses and sectors have responded. The survey's findings support the fast-growing trend of communicating with clients via digital platforms. They also demonstrate that adoption rates are years ahead of where they were in prior polls, with developed Asia leading the way much more than other regions.

According to a Mckinsey survey, respondents are three times more likely to claim that at least 80% of their consumer interactions are digital now than they were before the crisis.

Perhaps more startling is the increased rapidity with which digital or digitally enhanced offerings are being developed. The findings from the same Mckinsey survey imply a seven-year increase in the rate at which companies produce these products and services across regions. In industrialised Asia, the leap is even greater—ten years this time.

The challenge now is how can the industry speed up the digitization process to make a strong comeback in a socially-distanced world? The easy solution is to put the customer first and identify the customer journeys that can be improved through the use of technology.

According to a study, if we look at the tourism sector, COVID-19 has seen $180 Bn in revenue losses for the global travel market and a 46% YoY decline in business travel spending since March 2020.

Air Asia has been at the forefront of digitizing its marketing efforts and using data, automated machine learning, and AI to make smarter, more relevant decisions to achieve its strategic business goals.

In a conversation with Iztok Franko at DigginTravel Podcast, Ravi Shankar from AirAsia – talk about how his team created their measurement framework and how they scaled up their digital marketing team from 8 to 50+ people.

When asked how Air Asia connects digital marketing to not only usual airline analytics like clicks, visits, click-through rates, and conversions but also general commercial data and routes and revenue management, Ravi dives deep into the mechanics of his measurement framework.

According to Ravi, none of Air Asia’s digital marketing dashboards uses any vanity metrics. None of their dashboards has clicks, impressions, or any other fancy words like viewability. Rather, all campaign dashboards have business metrics only – how many people came in, how many people did a flight search, how many people actually booked.

AI-driven Sourcing and Procurement Analytics for Travel Businesses

For good reason, sourcing and procurement analytics tools have recently piqued the interest of CPOs and Spend Management Specialists all around the world. In most traditional businesses across the world, the amount of unstructured data pouring in from numerous sources, such as vendor spreadsheets, ERP, and other unconnected systems, is overwhelming. Procurement, on the other hand, is already being transformed by Artificial Intelligence. Many time-consuming operations are being automated or improved, and AI is providing Procurement specialists with extra insights based on incredibly complicated and enormous volumes of data. In its most basic form, AI is a software solution for completing a given task. Because AI is merely software, it has the ability to drastically alter work processes in even the largest companies.

Here are a few examples of how AI-driven spend analytics and procurement tools may help businesses stay on track:

• In procurement, artificial intelligence (AI) and machine learning (ML) can help reduce the time and effort spent manually doing repetitive activities.
• Another significant benefit of employing an AI-enabled solution is that companies can look at their future strategic planning as well as spend analytics and historical data analysis.
• Accurate monitoring and reporting help detect and avoid the numerous obstacles and common potential dangers related to business continuity.

Procurement solutions driven by AI are meant to collect and analyze relevant data to determine where your company is spending money, where the competition is spending money, who your suppliers are, how the market is acting, and what better options exist that you can take advantage of. Aside from breaking down the data into simply digestible bits, the software also gives advice on how to make better judgments in order to save more money.

Vendor Self-Service Is The Future Of Procurement

Self-Service Procurement is a self-service ERP tool that streamlines and speeds up the purchase process. Employees can use it to create and manage shopping carts for their purchase orders.

Digital procurement is quickly becoming the preferred method of obtaining raw goods and resources. According to a report, it will outperform all other kinds of procurement in 3 to 5 short years.

Organizations must be ready for this digitally dominated future of procurement. What does this mean for your procurement?

• More User Control

Customers are now accustomed to having a great deal of influence over their purchasing and selling decisions. Digital services, such as Booking.com for travel bookings, or DoorDash for food delivery, allow users the flexibility to make a purchase anytime and from anywhere.

This level of control is possible through vendor self-service. A digital procurement system streamlines time-consuming legacy procedures for procurement teams; from onboarding and offboarding to day-to-day vendor interactions.

• Mobile Friendly

Self-service procurement must also comply with another major trend: mobile. In fact, 60% of B2B buyers intend to expand their mobile usage in 2019, with that number rising to 70% by 2020. To service these mobile-minded B2B buyers, your procurement must be mobile-friendly.

Cost containment is the top priority for APAC-based companies, and it's a crucial area where APAC procurement executives can earn even more trust. To deepen this trust, procurement will need to strengthen its foundations while also looking to the future, delivering cost reductions and risk mitigation while experiencing a true digital revolution.

Future Trends Re-shaping The Travel Industry Post Covid-19

Some of the most prominent emerging procurement trends post-pandemic are:

1. Increased Supplier Collaboration in Logistics Management

The growth in collaboration between suppliers and their clients is by far the most noticeable development. Rather than panicking and looking for other ways to satisfy their supply networks' changing demands, clients are engaging with their existing supply chains to renegotiate mutually beneficial win-win agreements, find new solutions to new problems, and meet demand shifts. This has resulted in improved client communication and supplier relationship management, which can only lead to a stronger long-term connection

2. Emphasis on Flexible Resourcing

Flexible resources, such as consultants and interims, are in higher demand. It's possible that businesses are recognising a skill gap as they try to plan their return to normalcy. Perhaps they are in the midst of a shift and want additional resources to oversee a new project. Previously, a Head of Procurement could have limited their contractor search to within an ‘x-mile’ radius of their place of business, but today 'location' is lower on their priority list.

3. Touch-Free Service

A brand's distinctive selling factors, safety and hygiene have surpassed comfort and luxury offerings. As a result, established businesses are rapidly introducing digital capabilities like biometrics, artificial intelligence (AI), and digital identity management to provide seamless self-service with minimum human interaction throughout the process.

Conclusion

Technology-driven Procurement analytics tools refer to the latest innovations in industrial automation and data sharing, such as IoT (Internet of Things), cloud and cognitive computing, drones, and AI (artificial intelligence), which are a mix of technologies. At the same time, businesses must consider digital transformation while also ensuring that their operations are not hampered. For dull and tedious work, AI and automation play an essential role as a substitute for humans. The impact of automation and digital transformation on the firm and its surrounding environment must be assessed.

Procurement professionals would prosper if they adopt a digital procurement strategy intelligently. This shift towards Digital Procurement Solutions is here to stay and companies need to align their business goals around it to stay relevant in the post-pandemic era.