Digitization trends in Procurement
An overview of the Asian market with a special perspective on SMEs in India
By Koen van de donk, Brainbox Consulting
Procurement leaders have experienced a harsh time when it comes to finding the optimal solution for the vastly changing world of suppliers. The Asian economy is slowly starting to recover from the impact of the Covid-19 pandemic. However, there is still a long way to go before they are back on the same growth levels as before. To help this process, it is important to look at business needs and trends. These can help procurement leaders to find the most effective ways to improve their procurement activities.
Asian businesses are starting to gain more confidence in the economy, resulting in a higher will to invest and improve. The growth of digitizing procurement activities has been fairly slow over the last years. A 2021 survey by McKinsey however, has shown that 92% of the interviewed senior supply chain executives intend to invest in improving their procurement activities and supply chain resilience in the coming years. Asian governments have also introduced multiple nationwide promotion projects for e-procurement. While these are mostly targeted at the public sector, there are also organisations that target the private sector. SAP had noticed that the amount of users of their IT solutions was stagnating in Asia. For this reason, they introduced the Rise with SAP program in 2021. Since, they have gained over a 100 new users, proving that their promotion campaign was effective. The rise of the digital economy is one of the main reasons for the significant economic growth. India has the fastest growing digital economy in the world. They will be able to reach a digital value of 1 Trillion dollars by 2025.
The new interest in digitization has resulted in a sharp increase in ERP usage. ERP systems provide a company with better oversight by implementing real-time data, automated reporting and remote access. Research by Allied Market Research has shown that India is forecasted to have the highest ERP adoption rate in Asia. Different sectors like the finance and HR sector are leading the ERP adoption, meaning that procurement is lagging behind.
Since India has the highest potential, it is important to see what business needs their SMEs are experiencing. Problems like shipment delays, struggling with large amounts of data and accessibility are stopping Indian SMEs to perform at an optimal level. Shipment delays are increasing expenses and decreasing the credibility of the company. Combined with the difficulty of handling large chunks of data, this can result in a huge loss of efficiency and revenue. The next challenge is the accessibility of SMEs in India. While medium enterprises are often located in a favorable are, smaller enterprises or their direct suppliers are difficult to reach. As a procurement specialist, it is important to find a solution for these challenges.
Procurement Technologies like SAP Ariba can tackle these problems by creating a clear environment for all procurement activities. It is a digital platform that is easy to access and easy to use. Shipments can be tracked, and data is stored and handled as efficiently as possible. For procurement leaders, it is important to optimize their digitization efforts to keep up with the competitors in the future.
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