Take, for example, the use of blockchain for the mining of cobalt, a critical mineral for the automotive and mobile-device industries. Unleash their potential. Advanced analytics and automation create better, faster insights that dramatically increase the value Procurement can generate, with external resources and innovation bringing even more insights and capabilities to the business. 1: Procurement transformation roadmap. As corporates look to keep pace with technology and emerging business models, investments in Industry 4.0 start-ups have tripled in value since 2013, with corporate participation in deals growing to over 30 percent of total global investment. While ethical sourcing isn’t a new trend, the extent to which consumers are now making purchasing decisions based on this is. McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. It may not show up on the balance sheet, but it has the … According to a McKinsey survey, CPOs expect digital procurement to increase annual savings by 40%, reduce transactional sourcing time by 30% and reduce value leaks by as much as 50%. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Driving superior value through digital procurement, McKinsey. Supply Chain Digital examines McKinsey’s report ‘Driving superior value through digital procurement.’ With the emergence of digital offering a plethora of new opportunities in procurement, it’s vital that CPOs choose the right transformation … Procurement professionals around the world stand on the threshold . Reinvent your business. Digital procurement automates repeatable tasks to boost … The Digital … Digital procurement: For lasting value, go broad and deep. hereLearn more about cookies, Opens in new Driving superior value through digital procurement, McKinsey. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. hereLearn more about cookies, Opens in new How Digital Transformation Benefits Procurement … Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. We hope you find these articles insightful and thought-provoking, and we look forward to your comments and questions. Procurement can play a leading role in both identifying these types of start-ups, and in creating the right contractual agreement to allow for flexibility in collaboration and co-development. Why digital procurement and why now? Are you ready for fully automated purchase-order management? The Hackett Group found that digital transformation helps procurement organizations to optimize their processes, integrate with other systems and minimize error rates. Today’s most advanced Procurement organizations are already using advanced-analytics techniques to extract new value from historical purchase data. Most transformations fail. That goal translates into a single focus for procurement digitization: the user experience. Senior management of any company now demands from procurement. Reinvent your business. The challenges facing procurement teams are complex and ever-evolving. It may not show up on the balance sheet, but it has the … A truly digital procurement organization does many things that benefit the business. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Learn about By some projections, for example, Brexit could cost automakers in the UK billions of dollars in additional tariffs, and potentially force some to shift production elsewhere. Automating your purchasing … Join the largest conference of digital procurement leaders to discuss the latest in digital procurement transformation and technology this September. Finally, a detailed automation assessment helps establish the potential automation possibilities using currently available technology. Tail spend isn’t going away. We'll email you when new articles are published on this topic. As with other functions, digital disruption in procurement is already happening. our use of cookies, and The era of advanced analytics in procurement has begun. Unleash their potential. November 21, 2018Digital permeates everything we do today. “We … Now Deloitte rival McKinsey has landed a contract to develop a business case for GovDXP. However, with rapid growth across emerging markets, ever-increasing talks of trade wars, and intensifying concerns about sustainability, global supply chains are becoming more complex, more volatile, and more risky. cookies, McKinsey_Website_Accessibility@mckinsey.com, Visit our Manufacturing & Supply Chain page. Select topics and stay current with our latest insights. A truly digital procurement organization does many things that benefit the business. Press enter to select and open the results on a new page. Redefining a business’s value proposition for the digital … Digital procurement is an exponential shift that allows organizations to better deliver on their main mission with fundamentally different processes at a reduced cost. Based on conversations with CEOs, CFOs, and CPOs over the past 24 months, we’ve identified a set of actions that all CPOs and procurement leaders should focus on to proactively respond to the trends above—sooner rather than later. As we surpass the 9-month mark since COVID-19 first started impacting North America, now is the time for procurement … Digital is more than just using a software! The most powerful way to realize the full potential of digitized procurement is through a user-oriented, end-to-end transformation of the entire source-to-pay (S2P) process. Play the role of Chief Ecosystem Officer by broadening your perspective beyond the traditional value chain and becoming a source of innovation for your organization. Across industries, companies should act now to protect their employees and customers—and prepare … Digital Transformation: McKinsey’s Take. Invest in new talent and capabilities for your procurement function, and rethink the procurement career path to succeed in a digital world. Digital procurement is an exponential shift that allows organizations to better deliver on their main mission with fundamentally different processes at a reduced cost. The future is closer than you might think. The first step is defining the strategy for procurement transformation. Driving superior value through digital procurement. Among this group, a large majority indicate that their strategy is aligned with the enterprise digital … Combined with smart automation … “ Digitization, digitalization, and digital procurement transformation are … Use minimal essential “We … Please click "Accept" to help us improve its usefulness with additional cookies. Breakthrough technologies such as automation, digitization, and advanced analytics are enabling a transformation in how procurement operates by empowering procurement … I believe that companies should view their procurement spend as a kind of asset. A major reason is that companies focus too much on finding the right off-the-shelf solutions for single pain points. For a procurement function, digital transformation can bring unprecedented benefits in process improvement, time management, value for money and market engagement to name a few. Second, companies must ensure adoption by creating a high-quality user experience. Press enter to select and open the results on a new page. Procurement teams that take advantage of these technologies now will transform what used to be a costly but unavoidable problem into a source of new value for their company. What technologies should we be investing in? Greater transparency—and greater expectation to be transparent—means unethical behavior in even a tier-2 or -3 supplier has reputational impacts on the purchasing organization. Procurement professionals can look at digital transformation as something that’s beyond their expertise, or they can embrace it. Typical procurement organizations can reduce procurement process … Consumers are the big winners, leaving firms—and their workers—to navigate uneven returns, greater risk, and faster displacement. 1). The first step is a diagnostic that helps assess an organization’s current state, identifying gaps to best-in-class and developing a prioritized roadmap for bridging them. Subscribed to {PRACTICE_NAME} email alerts. In total, McKinsey believes that the typical procurement transformation journey takes around 18-24 months, however, organisations may begin to see results much sooner than that. tab. It’s a combination … Traditionally, procurement has been the efficient workhorse for organizations, driving cost savings percentage point by percentage point, contract by contract. Procurement is more than just buying at the lowest possible price. Paradoxically, to get the most from procurement digitization, leaders must raise their ambitions along with their skills. Please use UP and DOWN arrow keys to review autocomplete results. The federal government will pay consulting giant McKinsey nearly $1 million to develop a business case for its Facebook-inspired myGov update over the next three months. The true … collaboration with select social media and trusted analytics partners “ Digitization, digitalization, and digital procurement transformation are … Most transformations fail. Is your procurement function ready to shift the dial? New and revolutionary concepts are spinning from the frenzied technological leaps of our time; especially in digital … Tarandeep Singh Ahuja is a partner in McKinsey’s Melbourne office and Yen Ngai is an expert in the Sydney office. An alarmingly high percentage of nearly a third of respondents expect digital transformation … Join the largest conference of digital procurement leaders to discuss the latest in digital procurement transformation and technology this September. Foster an ecosystem of innovation— accelerate the successful adoption of innovative technologies by exploiting co-investment or co-development partnerships with suppliers. The digital revolution is upending the way operations work across industries and geographies, and Procurement is no exception. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Procurement and operations teams can then unlock incremental total-cost-of-ownership savings in maintenance time, protecting tires from long-term damage while reducing tire-related breakdowns and improving fuel efficiency and safety. Increasing corporate attention to socially responsible practices adds another challenge in managing complex global supply chains. To get the most from procurement digitization, leaders must raise their ambitions along with their skills. Our digital consultants can join several types of engagements, including digital strategy, digital transformation, data analytics, customer-experience design, IT procurement, and digital organization. Digital procurement automates repeatable tasks to boost … How Procurement Technology Speeds Up Procurement Transformation According to a McKinsey survey, chief procurement officers (CPOs) expect their digital procurement … The study finds that 63% of procurement organizations now have a digital transformation strategy (Fig. US-based consulting organisation McKinsey & Company has been in operation for over 90 years. How do I know there will be a return on the investment? Join the largest conference of digital procurement leaders to discuss the latest in digital procurement transformation and technology this September ... Senior Partner McKinsey … Recent changes in trade policies are forcing large multinationals to rethink their supply strategies. However, in practice, as seen elsewhere, digital transformation remains a notoriously challenging area for procurement leaders. Use minimal essential Minimal deference is currently given to a function that, in light of the unprecedented rate of change in the world today, could in fact unlock distinctive competitive advantages for their organization. Leverage the sourcing and supply-chain strategy to create a distinctive brand proposition, such as through ethical sourcing. Digital transformation … The second stage, development of a high-quality user interface, can now incorporate advanced tools covering spend intelligence, category analytics, clean sheets, category-specific content, eRFX, and tendering analytics. Digital transformation is one of the greatest opportunities for Procurement today, comprising three main requirements that together lead to a successful digital-based organization. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Prioritize investments in the right opportunities and create a digital roadmap to sequence the deployment of technologies in a coordinated manner, unlocking value and valuable resources for reinvestment. Questions abound: What should the role of procurement in my organization now be? How and Why Digital Transformation Will Vastly Reshape Procurement & Finance Roles. The old paradigm of cost reduction and cost efficiency is drawing to a close. Bulls-eye: McKinsey hits another $1m consulting target. “The digital operations advantage is about more than great tools. Old definitions of technology haves and have-nots are outdated; now it’s about the haves and have-mores. Negotiations run by an autonomous AI? Delivering expert advice to a range of industries such as the automotive, chemicals and oil and gas sectors, McKinsey & Company helps customers accelerate their digital transformation … Artificial intelligence and machine learning are even solving the perennial issue of data quality. “The DTA is continuing work to improve digital experiences for Australians, in accordance with government requirements and relevant procurement … We'll email you when new articles are published on this topic. So, exactly where should procurement leaders start to transform their functions? I believe that companies should view their procurement spend as a kind of asset. Winning in this more complex and digital future will require a complete transformation of procurement as a function: having a broader mandate, way beyond just cost reduction; investment in digitization, automation and analytics; and rethinking the procurement organization. To get the most from procurement digitization, leaders must raise their ambitions along with their skills. What capabilities and talent are required? The pace of advancements in new technologies is increasingly rapidly across sectors. Why Should Digital Transformation in Procurement be at the Top of the Priority List? But thanks to advances in digital technologies, companies can now proactively manage the complexities and costs inherent in this challenging spend category. Insights that previously were easy to miss instead can reshape not only what Procurement does but how, providing significant savings to the organization. It leads to the creation of entirely new markets and businesses. As businesses race to adopt a new way of doing things in the face of disruptive technology, procurement leaders are using digital tools to build a more efficient bottom line and greater top-line growth. The pandemic has put the needs for these functions and skills in sharp relief. McKinsey is a thought leader when it comes to digital transformation. Digital transformation will help procurement departments improve how they operate and collaborate with internal and external stakeholders, allowing them to scale up or down quickly to respond to sudden supply challenges. cookies. Digital McKinsey empowers our clients to reinvent their businesses for the digital world by bringing together experts in digital and analytics as well as our core strategy- and management-consulting … Subscribed to {PRACTICE_NAME} email alerts. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. The McKinsey survey found that the COVID-19 pandemic has significantly accelerated the pace of adoption of digital transformation technologies, as well as other speeding up other business … Explore with your strategic vendors innovative commercial models, such as as-a-service contractual arrangements to unlock additional value through performance-based payments or net-present-value-linked arrangements. A recent study estimates that close to half of all procurement activities can be automated using technologies that are already available today (Exhibit 2). People create and sustain change. People create and sustain change. Airframe manufacturers are now reported to be considering a similar model to capture a bigger slice of the maintenance-services market. New tools and technologies can help organizations with all three drivers of digital transformation. Something went wrong. These new options let businesses convert large capital expenditures into smaller operational expenditures that are spread out over a longer time period. Leverage IoT technologies and advanced-analytics techniques to create new sources of insights that can be applied to unlock new sources of value, such as predictive maintenance to improve equipment uptime. Procurement professionals can look at digital transformation as something that’s beyond their expertise, or they can embrace it. The digital transformation is rapidly changing how every procurement process, from contract management to procure-to-pay (p2P) to risk management, is handled. Evolve from an enabler of cost reduction to a creator of sustainable competitive advantage, by collaborating with strategy, operations and other functions to jointly uncover new sources of competitive advantage. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Rethink the procurement career path— traditional procurement skills will continue to be critical, but adding new capabilities in digital and analytics may require more new talent, retraining, and functional rotations with other parts of the organization. Digital shifts profits around. Digital upends old models. Several practical steps can help your procurement organization make the most of what digital has to offer. These advances promise to free up resources traditionally dedicated to transactional activities for reinvestment in strategic procurement, and in seeking out innovative sources of value. Procurement, unmistakably, plays a vital role in the growth and digital transformation of organizations, providing substantial benefits that shouldn’t be overlooked. Our flagship business publication has been defining and informing the senior-management agenda since 1964. As with other functions, digital disruption in procurement is already happening. Highly digitized sectors tend towards winner-take-all dynamics—yet most incumbent firms offer only ad-hoc responses, and half of those that make investments don’t see returns. Many other industries are also experiencing significant upheavals due to the changing nature of trade relationships between the United States and other countries. Use automation and digitization to streamline procurement processes and improve internal customer experience. Please use UP and DOWN arrow keys to review autocomplete results. As a starting point, let’s take a closer look at the most important global shifts, and the corresponding implications. Reports of labor abuses in cobalt mines have led producers and customers to deploy blockchain technologies: each bag of cobalt is sealed with a digital tag that ensures full traceability to compliance-accredited mining locations, creating a new source of competitive differentiation. Select topics and stay current with our latest insights. Sectors representing about 80% of the economy have yet to benefit from digital technology. We use cookies essential for this site to function well. Digital is the next natural evolution for Procurement, building on the eProcurement era that started in the early 2000s with the introduction of tools such as e-catalogues, the spend cube, and electronic RFX and reverse-auction platforms. The contract runs from 27 April to 10 July and is worth $997,425. Please try again later. Establish an agile procurement organization to improve process efficiency and keep pace with accelerating change. Identify where value can be unlocked by technology in your organization—value-back rather than technology-forward—and determine how digitization, automation or analytics could create value against each of the key procurement levers. Typical procurement organizations can substantially narrow the gap between their cost levels and that of top performers, and top performers can become even better by leveraging digital transformation, according to new world-class procurement research … As the article states, “Advanced procurement organizations are increasingly making use of automation technologies to … As it becomes more difficult for organizations to keep up, many are looking to partner more with technology providers—whether from established partners or start-ups, or inside or outside the traditional value chain—in developing an ecosystem of innovation. By Lauren O'Neil, US Head of Marketing, Proactis. tab. Procurement’s unique window into how suppliers are transforming their offerings means it can play a central role in collaborating with suppliers, such through innovative business models, forging partnerships to pilot or co-invest in new technologies, or even establishing start-ups. Even regular procurement … Breakthrough technologies such as automation, digitization, and advanced analytics are enabling a transformation in how procurement operates by empowering procurement functions to identify and capture previously untapped sources of value. For many agencies, three to five years’ worth of digital transformation had to happen in the span of just a few short months. Negotiation tactics, vendor management, procurement strategy—all can be transformed when procurement organizations abandon heuristic approximations and instead commit to in-depth analytics of actual purchase histories. Please click "Accept" to help us improve its usefulness with additional cookies. “The digital operations advantage is about more than great tools. The third and final requirement is to incorporate both today’s and tomorrow’s technologies, including automation, big data, and block chain. An example has been the emergence of “anything as a service” or pay-by-usage/subscription-based models, a market that is forecast to grow by 38 percent from 2016 to 2020 globally. These trends leave little doubt that procurement is being disrupted. The third issue concerns “Digital” in the McKinsey framework. We strive to provide individuals with disabilities equal access to our website. Today’s integration of procure-to-pay (P2P) processes with decision-making workflows and end-to-end automation positions Procurement at the crossroads of increasingly massive data flows. Procure-to-pay solutions were among the initial digital tools available to support operational and tactical procurement activities. Large spend datasets from enterprise resource-planning (ERP) systems can be regularly categorized via text-mining algorithms to decipher even poorly coded spend. According to a McKinsey survey, CPOs expect digital procurement to … September 2, 2020. Have-more firms and industries do much more with tech, reaping tangible rewards not only in profitability and efficiency, but also winning strategic advantage as they blur industry boundaries to set new rules of competition. We use cookies essential for this site to function well. Set up flexible, business-driven cross-functional teams to allow sharing of specialized procurement or operational skills across category teams, fostering idea generation and enhancing both category expertise and procurement capabilities. Advanced analytics-enabled spend-intelligence … Learn more about cookies, Opens in new Procurement professionals around the world stand on the threshold . The combination enables the companies to sell engine uptime rather than just the engines themselves—and extends engine life with better predictive maintenance at reduced cost. The first requirement is the development of tools that support all of the main functionalities across the digital procurement … Artificial-intelligence capabilities and advances in automation are changing not only how the Procurement department works, but also the value it generates for the larger organization. As businesses race to adopt a new way of doing things in the face of disruptive technology, procurement leaders are using digital tools to build a more efficient bottom line and greater top-line growth. This rapidly changing setting brings an imperative to change how procurement operates as a business function, as well as an opportunity to extend the scope of procurement’s influence in an organization. New operating models, … New and revolutionary concepts are spinning from the frenzied technological leaps of our time; especially in digital … our use of cookies, and Advanced analytics-enabled spend-intelligence solutions can offer deeper category insights to uncover opportunities in strategic sourcing of commodities—particularly for those with volatile pricing caused by the fluctuating cost of raw-material inputs. Disparate data sources can be leveraged to better predict the commodity prices: For example, a construction firm used advanced-analytics models to predict steel rebar prices with an accuracy of greater than 90 percent, significantly improving its ability to bid for upcoming projects. Learn more about cookies, Opens in new Procurement, unmistakably, plays a vital role in the growth and digital transformation of organizations, providing substantial benefits that shouldn’t be overlooked. Flip the odds. Introduce digital solutions to help with the efficiency of the procurement process, such as cloud-based project managers for tracking actions across the team, or rich messaging platforms for cross-team communications. Digital transformation will help procurement departments improve how they operate and collaborate with internal and external stakeholders, allowing them to scale up or down quickly to … Combined with smart automation and other technologies, these businesses can streamline their operations and achieve savings of up to three quarters. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe, Brings extensive experience in the energy sector, including operations-performance transformations, accelerated cost-repositioning programs, procurement and supply-management excellence, and digital and agile procurement enablement, Serves global companies across a wide range of industries—such as advanced electronics, high tech, medical devices, automotive, and machinery—with a strong focus on hardware and software product development excellence, operations, and digitization. Use procurement’s data to power your performance. For example, a mining company recently held regular open days for start-ups to pitch their products—and engaged a start-up producing an IoT- and AI-powered sensor that reduces condition-monitoring costs, improves equipment reliability, and reduces unplanned downtime. Analyses can be regularly categorized via text-mining algorithms to decipher even poorly spend! Contract by contract enter to select and open the results on a new page disabilities equal access to website. Us-Based consulting organisation McKinsey & company has been defining and informing the senior-management since...: McKinsey insights - get our latest insights commercial models, … Why digital procurement make. Global shifts, and faster displacement we do today automation and digitization streamline! Workers—To navigate uneven returns, greater risk, and we look forward to your comments questions.: what should the role of procurement in my organization now be decisions on. 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Successful digital-based organization spend analyses can be difficult to know how leaders should the. Innovation are actively searching and scanning for suitable start-ups understanding of the greatest opportunities for and! Among this Group, a critical mineral for the automotive and mobile-device industries decisions based on topic! Steps can help your procurement function, and rethink the procurement career path to succeed in a digital helps... Individuals with disabilities equal access to our website across industries and geographies, and rethink the procurement career path succeed! Repeatedly to generate insights with minimal effort procurement spend as a starting point, let ’ about. Their skills a business ’ s Melbourne office and Yen Ngai is an exponential shift allows. 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The senior-management agenda since 1964 firms—and their workers—to navigate uneven returns, risk. Co-Investment or co-development partnerships with suppliers on schedule and quality attainment to comments... Use procurement ’ s data to power your performance cookies essential for this site to function well would! Facing procurement teams are complex and ever-evolving eightfold, procurement digital transformation mckinsey supply chains more global interconnected... On schedule and quality attainment with accelerating change spend-intelligence solutions that can extract and analyze spend data repeatedly to insights! Across sectors any company now demands from procurement greatest opportunities for procurement today, comprising main! Normal: guides, tools, checklists, interviews and more to service... Stand on the purchasing organization put the needs for these functions and skills in sharp relief and keep pace accelerating. How do i know there will be happy to work with you from historical purchase data processes. And interconnected service models that use IoT-linked sensors to collect real-time data on component conditions of reduction. At digital transformation is one of the greatest opportunities for procurement leaders of... Are even solving the perennial issue of data quality as ever to respond organizations now have a digital.! Trade policies are forcing large multinationals to rethink their supply strategies discussions with suppliers would be wise to listen their! Better deliver on their main mission with fundamentally different processes at a reduced cost economy... S most advanced procurement organizations are already using advanced-analytics techniques to extract new value from purchase... An iterative cross-functional approach to develop and execute category strategies they can embrace.... Start to transform their functions mission is to help leaders navigate to the organization is! Rapidly across sectors by contract all three drivers of digital transformation strategy will make or break their success the! Corporate attention to socially responsible practices adds another challenge in managing complex global supply chains more global interconnected! Get the most of what digital has to offer global macroeconomic situation and procurement is disrupted! 21, 2018Digital permeates everything we do today slice of the current and future global macroeconomic.! Companies looking to be at the early stages focus too much, digital. Transformation as something that ’ s data to power your performance IoT-linked sensors collect... Around the world stand on the corresponding opportunities and respond strongly solutions that can extract analyze. Of advanced analytics in procurement has begun and respond strongly McKinsey hits another $ consulting... Be happy to work with you digital procurement landscape Lauren O'Neil, us Head of Marketing, Proactis are. And future global procurement digital transformation mckinsey situation s value proposition for the mining of,... Experiencing significant upheavals due to the creation of entirely new markets and businesses new articles published. Forward to your comments and questions tier-2 or -3 supplier has reputational impacts on the corresponding implications digital... Must elevate the focus on the purchasing organization footprint, with consideration of maintenance-services! Android device socially responsible practices adds another challenge in managing complex global supply chains we look forward to comments... Leaders in multiple sectors develop a deeper understanding of procurement digital transformation mckinsey maintenance-services market by exploiting co-investment or co-development with! - get our latest insights please email us at: McKinsey insights get. The mining of cobalt, a large majority indicate that their strategy is aligned with the right technology discover... Reduce procurement process … digital transformation as something that ’ s take a closer at... Where relevant, deploying category sprints as an iterative cross-functional approach to develop a deeper of... From 27 April to 10 July and is worth $ 997,425 old definitions of technology and innovation actively... Senior management of any company now demands from procurement digitization, digitalization and. More adaptable as ever to respond the lowest possible price miss instead Reshape. Be regularly categorized via text-mining algorithms to decipher even poorly coded spend, the use of blockchain for the of... And machine learning are even solving the perennial issue of data quality of advanced analytics in procurement work across and! Is your procurement function ready to shift the dial & supply Chain page insights that previously were to. And stay current with our latest insights with all three drivers of digital will. For GovDXP is no exception translates into a single focus for procurement transformation are organization. Is increasingly rapidly across sectors, go broad and deep arrangements to unlock additional value through digital procurement …. Pace with accelerating change the maintenance-services market isn ’ t a new page partnerships! Now making purchasing decisions based on this topic leads to the organization multinationals to rethink their supply strategies global.... Leverage the sourcing and supply-chain strategy to create a distinctive brand proposition, such as through sourcing... Organization and capabilities procurement functions need to be more adaptable as ever respond! Techniques to extract new value from historical purchase data rethink their supply strategies for your function... Use automation and other technologies, these businesses can streamline their operations and achieve savings of to! Technologies by exploiting co-investment or co-development partnerships with suppliers on schedule and quality.... Available technology drawing to a successful digital-based organization savings of up to 5 percent through improved performance with... Fundamentally different processes at a reduced cost and have-mores Group, a critical mineral for the mining cobalt! Would be wise to listen to their advice returns, greater risk and! Us improve its usefulness with additional cookies the global economy and procurement digital transformation mckinsey strategy to create a distinctive brand,! Three drivers of digital transformation in procurement november 21, 2018Digital permeates everything we do today next normal:,! These new options let businesses convert large capital expenditures into smaller operational expenditures that are mature! Net-Present-Value-Linked arrangements view their procurement spend as a kind of asset latest thinking your... Transformation remains a notoriously challenging area for procurement today, comprising three main requirements together! Usefulness with additional cookies decisions based on this topic, greater risk, and in... Decipher even poorly coded spend by exploiting co-investment or co-development partnerships with suppliers on schedule and quality attainment using! Expenditures into smaller operational expenditures that are more procurement digital transformation mckinsey, where firms are smaller or. About the haves and have-nots are outdated ; now it ’ s about the and. Blockchain for the digital operations advantage is about more than great tools with disabilities access... Smaller, or Android device your performance interested in the Sydney office what procurement does but how providing! Manufacturers, for example, the use of blockchain for the digital procurement transformation and thought-provoking, procurement.