SINGAPORE (Aug 30): Digital disruption is set to bring about game-changing impact on existing procurement industry core capabilities; the ones responsible for implementing these technology solutions just don’t know it yet.

So suggests Reboot Procurement, a new report based on a recent study of over 60 chief procurement officers (CPOs) conducted by KPMG, the National University of Singapore (NUS) Business School, and Supply Chain Asia.

Most respondents were based in Singapore with more than half representing listed companies.  

According to KPMG’s joint survey findings, more than half of procurement leaders (59%) have budgeted for procurement or transformation – but only 40% felt they had a comprehensive procurement strategy, indicating a lack of clarity over the impact of digital disruption and how best to transform their functions.  

KPMG points out that specifically, respondents were unsure of the benefits of Internet of Things (IoT) technologies, such as sensors and blockchain, to the function and the organisation of procurement.

More importantly, the professional services firm highlights that an “overwhelming” 79% of CPOs surveyed believe that digital disruption will not significantly disrupt the organisational role of procurement.

This is contrary to KPMG’s prediction of “the successful integration of the digital and physical world” on which the future of procurement depends on, where traditional activities are replaced by technological innovations with the emergence of a new generation of “procurement professionals who will thrive in a connected enterprise”.

Satya Ramamurthy, partner & head of management consulting at KPMG in Singapore says the struggle with legacy infrastructure and processes are preventing many procurement functions from unlocking the potential of the data at their disposal.

“Procurement functions need to better articulate the value these new technologies bring to their organisations and how digital tools will revolutionalise the way they work,” he opines.

KPMG notes that among the newest technologies shaking up the industry are artificial intelligence (AI), robotic process automation (RPA) and blockchain, which have already been successfully implemented in numerous industries and environments.

In the survey, most procurement leaders are also shown to have identified data analytics, AI and RPA as their top priority investments implemented or planned for over the next two years.

“In procurement, the use of AI takes many forms but most commonly in RPA, automation of spend analysis and analysis of contracts. Blockchains will rapidly rise in prominence in the procurement landscape. When successfully implemented, blockchains help the function build and gain trust and improve transparency with greater visibility of supplier capabilities, adherence to service level agreements and sustainability practices,” observes KMPG in its report.

Another area to note is big data, which KPMG believes will help  boost transparency and provide insight into the supply chain by equipping companies the ability to analyse larger data sets as well as create new applications and information services.

In Ramamurthy’s opinion, integrating spend-data with procurement data on supplier-vendor capabilities and performance will allow organisations to gain real-time visibility into consumption patterns.

“Analysing these patterns along with demand forecasts, product and quality specifications and stock levels, businesses can make better decisions around product and service delivery. They can also respond better to market demands, work more closely with suppliers to innovate as well as manage vendor-related risks,” he adds.