Lhotse Analytics’ latest report into industrial procurement organisations looks at the challenges they face.
Digitalisation helps overcome challenges, but many respondents admitted it is difficult to know which technologies to implement.
Based on 300 experts and professionals in manufacturing, operating in companies with $500 million to $10 billion in annual sales, the report looks at the challenges and digitalisation solutions that procurement teams are managing.
‘Only 22% of professionals fully incorporate procurement tools to generate cost savings or drive mitigation’
What are the challenges that procurement faces?
Whilst digitalisation isn’t top of the agenda of challenges (figure 1), it is clearly a key enabler for addressing the top 5 challenges in short and long term tasks.
‘Companies need to invest’
67% indicate that transparency at a cost driver level as a big challenge, emphasising the need for digitalisation and appropriate – automated – tools to help drive efficiency and effective strategic decisions. With appropriate investment, teams can gain more transparency and the insight they need to turn these into action to tackle these challenges to then unlock ‘risk potentials, savings, inflation, and supplier performance’. However, on average procurement professionals only deep dive opportunities and mitigation levers on only 24% of the total Spend. This indicates a massive loss of potential for the remaining 76%.
The good news is that everyone believes that digitalization is important. But 15% of the participants have no resources, and 11% have no budget available. Suitable tools can free up resources and can have a substantial benefit in reducing costs which helps businesses, in the long run. The majority of the survey, 53% find it very important to get a holistic overview of the tools and possibilities on the market.
The 7% are set to deliver higher performance levels for their companies.