Procurement Challenges Lie Ahead: Why Companies That Invest in Cloud-Based Solutions Will Have An Edge

Procurement Challenges Lie Ahead: Why Companies That Invest in Cloud-Based Solutions Will Have An Edge
mohamed_hassan / Pixabay

As every procurement manager knows, the process of purchasing goods and services from third-party suppliers has become stickier over the years. To be sure, procurement has always required a lot of moving parts. From snagging internal approval and finding reliable fulfillment suppliers to documenting receipt of merchandise and paying vendors, the traditional supply chain workflow has plenty of opportunities for snags and problems. However, modern procurement methods have become even more challenging.

Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q3 2021 hedge fund letters, conferences and more

Take the newest emissions-based directive from the Biden Administration, for instance. The directive puts pressure on procurement professionals to track and report greenhouse gas emissions throughout the supply chain cycle. Although this new policy hasn’t gone into effect yet, it will add steps to all procurement processes.

The Man Behind TCI: One Of The World’s Top-Performing Hedge Funds

TCI David Marcus Investment ResearchThe Children's Investment Fund Management LLP is a London-based hedge fund firm better known by its acronym TCI. Founded by Sir Chris Hohn in 2003, the fund has a global mandate and supports the Children's Investment Fund Foundation (CIFF). Q3 2021 hedge fund letters, conferences and more The CIFF was established in 2002 by Hohn Read More

What are some other major challenges in procurement? Many businesses struggle to expedite their purchasing processes as they scale. It can be hard to keep the momentum going as departments grow and procurement journeys become more complex. Inevitably, each delay becomes yet another setback in terms of time. Transparency can also be hard to achieve in procurement, despite the fact that everyone seems to want and expect it. Giving stakeholders access to real-time information without risking compliance or privacy issues takes careful planning and thought.

After more than a year of dealing with supply chain woes such as chip shortages and severe port congestion exacerbated by the COVID-19 pandemic, procurement teams might be too overextended to react with agility. So what’s the solution to these procurement roadblocks? For many companies, the answer has come in the form of cloud-based procurement software.

Moving Procurement Systems Into the Cloud

Cloud-based solutions are a natural fit when it comes to taking care of some of the biggest procurement headaches. Cloud software has the ability to automate even the most cumbersome processes and streamline back-and-forth communications. By eliminating manual tasks, procurement teams not only speed up their workflows, but also cut down (or eliminate) human error.

But automation is just one of the numerous benefits of procurement software that’s housed in the cloud. Cloud-based solutions give procurement users more control because they can see what’s occurring every step of the way. For instance, a financial officer could log into the cloud-based procurement system and immediately access accurate data. That data could then be used to create smarter budgets and more informed business decisions.

Without a doubt, businesses that want to be more effective and organized overall are likely to find cloud-based procurement a good fit for their goals and initiatives. It’s hard to argue with the upsides of being able to see and remedy sticking points before they become larger issues.

Choosing and Using Cloud-Based Procurement Software

Already, cloud-based infrastructures are becoming the norm across many business sectors. In the first quarter of 2021 alone, VentureBeat reports that companies’ spending on cloud-based systems increased by nearly 30%, echoing similar patterns from previous quarters. Nevertheless, procurement departments haven’t reached a saturation point when it comes to adopting cloud technologies.

Currently, the procurement software marketplace is in what appears to be a growth cycle. According to global figures acquired by Statista, software dedicated to handling all aspects of procurement should bring in nearly $6 billion in revenue by the time 2022 rolls around. Yet it’s unclear what percentage of the software is being used in a cloud infrastructure environment by procurement leaders and their staff members.

Here’s the bottom line: Procurement is unlikely to become less complicated as time wears on. That’s evident — especially with new regulations in the foreseeable future. This makes it imperative for finance departments to seek out ways to improve their systems while controlling costs, providing transparency, and reducing the likelihood of human error. Companies that invest in cloud-based solutions to run procurement today will be in a better position to lead their industries later.

About the Author

Chen Amit is the co-founder and CEO of Tipalti, a payment automation software that helps businesses manage their entire supplier payments operations by streamlining all phases of the AP and payment management workflow in one holistic cloud platform. Formerly the CEO of Atrica and Verix, Chen is a veteran high tech executive and repeat entrepreneur.

Updated on

No posts to display