Innovative Technology in Strategic Procurement (Research Paper Sample)

Innovative Technology in Strategic Procurement
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Table of Contents
Executive Summary 3
Introduction 4
The Need for Innovative Technology in Strategic Procurement 5
Current Issues in Using Innovative Technologies in Strategic Procurement 7
Talent Management 8
Choosing the Right Procurement Technology and Managing End-User Adoption 11
Leveraging Mobile Technologies in Procurement 12
Recommendation on the Adoption of Procurement Innovation 15
Impact 15
Innovation Teams within the Organization 16
Conclusion 17
Works Cited 19
Executive Summary
Companies are beginning to incorporate innovative technologies as a way of ensuring competitive leverage through cost savings, contract compliance, as well as risk mitigation. Increased global competition is forcing companies to come up with novel and internationally acceptable procurement strategies that depend on price reductions and improved product quality. Organizations that used to look at procurement as merely involving buying have begun to acknowledge that the procurement department plays a critical role as a strategic partner in any business organization. This paper looks at the issues in using innovative technology in strategic procurement and their implications. It also offers recommendations on the best ways of deploying procurement technology. Innovative Technology in Strategic Procurement
Introduction
Global trends in business has caused companies to look for better solutions in surmounting emerging challenges such as the need for ne procurement methods based on new values and trends. One of the factors that continue to hinder the use of innovative technology in strategic procurement is the disconnect that exists between the desired product by end users and what business organizations are developing. Without a doubt, companies that incorporate their suppliers during the initial stages of innovative projects appear to do better than those that do not. Increased global competition is forcing companies to come up with novel and internationally acceptable procurement strategies that depend on price reductions and improved product quality, responsiveness, financial circumstances, as well as production cycle intervals. Innovation involves converting concepts into reality. Therefore, innovative procurement procedures involve using the competitive market to invent better procurement practices. Most businesses operate in an intensely competitive environment. Competition brings about innovation, and most businesses must improve their processes continuously to remain in the market. The competitive market plays a crucial role in enabling access to market knowledge and experience. In this manner, a company can come up with a number of strategies for achieving its objectives. In strategic procurement, encouraging technological innovation serves as a vehicle for suppliers to better their services and products, which leads to superior services or products that can be marketed to the business community. In innovative strategic procurement, the procurers must transfer the information regarding their needs to the supplier while the supplier is tasked with transferring the knowledge of available technological solutions that may assist the procurers.
The Need for Innovative Technology in Strategic Procurement
The globalization phenomenon, which is a continuing process of economic interdependence between countries, is evidenced in the growing cross-border commerce. For manufacturers, globalization has played a critical role in spurring innovations, establishing an effective supply chain, as well as in improving the quality of their services and products. Together with the globalization windfall, global sourcing procedures act as important differentiators for booming, demand-driven value chain businesses. Some of the problems faced by organizations in the global business environment include trade regulations, inadequate management systems, language barriers, transportation, and lack of adequate technological capacity in production. For instance, the evaluation and control of business procedures employed by suppliers are difficult due to the variation in their locations. Moreover, while cultural issues are controllable when it comes to global procurement, it is still imperative to recognize that they need to be addressed. Innovation should be contemplated all through the procurement process. A practical and beneficial step for businesses would be to monitor constantly the possibility for deploying both radical and incremental innovation, but only if it is feasible to implement the former. The start of the procurement process presents the greatest prospects for innovation. The likelihood of innovation is usually inhibited by the terms and conditions once an organization enters into a contract. Nonetheless, opportunities may exist if the contract is governed by the need for constant improvement.
There is the need for procurement to redefine its traditional roles. Procurement departments have traditionally been concerned with delivering cost savings, fulfilling contract obligations, and the mitigation of operational supply risk. This focus has largely inhibited the involvement of procurement in innovation by restricting it to cost savings and facilitating contractual arrangements with suppliers. Procurement is no longer able to sway risk or cost because of the extensive involvement of suppliers in the design of products, as well as the fixed nature of the specifications. In addition, the traditional goals of procurement, which include compliance, cost savings, stability of supply, and the fulfillment of contractual obligations, are often at variance with business targets. This inconsistency has the potential of compromising the quality of the product before it reaches the end user. Market leaders are beginning to acknowledge that for procurement to play its intended role effectively, innovative technology must be incorporated the procurement process and groups. As businesses adjust and concentrate on opening up their operations by using innovation in gaining competitive leverage, the whole supply base, including potential and existing suppliers, should be exploited. Businesses should consider building a supply base capable of driving value through collaboration. In this manner, such businesses may develop a joint development process driven by a more innovative supply chain to enhance the development of innovative products, which will in turn trim down the costs associated with supply chain management and increase the value for the customer.
The use of innovative technologies in procurement presents a number of benefits, especially if they are deployed as part of the organization’s overall strategic plan. These may include overall reductions in procurement costs (such as reduction in the number of invoices tendered, which translates to a reduced effort matching and settling the invoice), precise and instantaneous flow of information, and close relationship with suppliers that leads to improved performance. Others are better management of the company’s suppliers and existing contracts, reduction of risks, increased diversity, more transparency, and better audit capabilities. Exact and instantaneous flow of information regarding the total expenditure and level of inventory can enable the business to examine procurement decisions with the aim of improving them. This can be beneficial in maintaining optimum stock levels, thereby enabling cost savings. Innovative procurement technologies facilitate better communication with suppliers, which eliminates the exclusive reliance on forecasts. The deployment of technology in procurement also minimizes the exposure of an organization to risks. For instance, technology can be used in ensuring that all suppliers are paid on time. In addition, it encourages competition and diversity by increasing the access of the suppliers open solicitation. Research suggests that by permitting improved access to the process of procurement by suppliers and experts, innovative technologies may play an important role in improving the collection and dissemination of information, which may lead to better auditing capabilities.
Current Issues in using Innovative Technology in Strategic Procurement
Organizations that used to look at procurement as merely involving buying have begun to acknowledge that the procurement department plays a critical role as a strategic partner in any business organization. Through technological innovation, the traditional tasks of procurement, which include service delivery and timely convenience, have been transformed into process efficiency and, therefore, savings on operation costs. Procurement must adjust and improve its operations in a manner that increases value.
Talent Management
Effective talent management is a sure way of ensuring a viable and responsive procurement process. The evaluation of procurement talent, which has traditionally relied on basic skill areas, is witnessing a radical shift towards rigorous assessment due to the incorporation of technology in the procurement process. This is important if the field is to attract and retain the best and most qualified talent. From the standpoint of the need to maintain a competent talent pool, it is worth noting that the most qualified procurement practitioners prefer consulting careers over real procurement or sourcing jobs. This has been due to the relatively hefty remunerations that consulting jobs offer compared to real sourcing roles. In addition, it is cumbersome and time consuming to scale the corporate ladder due to the broad experience needed to ascend to managerial roles in procurement, which has caused the profession to be viewed as a field that is not so challenging or appealing. From the perspective of business organizations, while companies...