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Major Issues for Digital Procurement and Supply Risks

Many companies know the importance and benefits of digital procurement but may not have sufficient knowledge before implementing it. Thus, this may lead to internal conflicts during the transformation process, and is an initial obstacle for implementing digitization in procurement. The procurement process needs to be rationalized with the aim to improve data visibility, reduce costs and risks. The company will face serious challenges if well-planned strategy and risk is not handled properly by procurement managers. Most organizations do not possess reliable real time data, information and a predictable procurement strategy. This could result in disruption of service, product supply chain and at the same time reduce efficiency in evaluation of new suppliers. Network security is another challenge faced by the companies during digital transformation where companies may be prone to cyber-attacks.

Awareness, Training and Communication

The implementation of digital procurement require a cross-departmental and decisive organizational structure. Full support from top management plays a very vital role in the success to the implementation. If the leader is lacking in the skills and knowledge in utilizing procurement technology, it will be difficult to establish an organizational structure that is able to support the transformation. Additionally, it will be difficult to resolve any conflicts of interest or administrative obstacles that might be encountered during the transformation process. Moreover, wrong decision choosing for an appropriate digital procurement products and solutions will result in increasing costs and reduction in efficiency. A well-planned systematic training is extremely important in providing a general understanding on the procurement process for employees. Employees need to understand the organization’s training objectives. In order to improve work efficiency and reduce errors, employees need to have sufficient knowledge of the new system. Proper communication at all stages during the project is very crucial to avoid any possibility of misunderstanding and minimize productivity loss. Employees’ opinions are required for a meaningful and stronger communication.

Procurement Strategy, Visibility and Data Accuracy

A well-planned digital procurement strategy can help to minimize errors, increases saving opportunities, eliminate maverick spending and ensure policy compliancy in the organization. If the organization is lacking a complete and well-planned procurement strategy, problems will arise. This will then results in financial losses and supply chain disruptions. Leaders must be able to decide on a strategy that will focus on achieving various quantifiable outcomes. Digital procurement must be able to identify potential risk for the supply of key products or services bother internally and externally. This will enable them to develop a quantified overall picture of current total product or service-related risk. They are also required to develop the right strategies to counteract the risks. Managers should be able to analyse the data according to the specific situation and assign resources to eliminate risks accordingly.

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Yasmine Ang Hui Ting, DPSM
Yasmine Ang Hui Ting has substantive years of experience in the specialised field of procurement and sourcing, specifically in the food packaging industry. She holds the Diploma in Business Studies and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Yasmine completed Diploma in Procurement and Supply Management (DPSM) on September 2021 at SIPMM Institute.

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