A good number of South African companies find themselves in a fairly precarious position when it comes to procurement because they have yet to properly integrate their basic processes and their weaknesses have come to be more evident during this time that limits peoples’ movement and physical contact.
The advent of the global Covid-19 pandemic has changed almost every business process and for procurement, it has exposed the need to improve existing processes as well as exasperated the opportunity for companies incorporate digital solutions as remote working has become a norm for the foreseeable future.
In a recent survey conducted by software development company Oxalys South Africa in partnership with the Chartered Institute of Procurement and Supply (CIPS), and Smart Procurement entitled: Post Covid-19: Procurement Key Priorities and Challenges in the Digital Era in South Africa – it was established that although there might be a lack of maturity in the South African procurement space, there is a real will to make it a strategic function, especially in the wake of the challenges brought on by the pandemic.
Oxalys is a global software vendor that has a South African-based subsidiary with a focus on procurement and is the preferred partner for mid-sized and large organisations from all industries in more than 25 countries around the world. With more than 30 years’ experience in the digital procurement solutions space, Oxalys’ solution helps organisations digitise the entire spend and procurement process: Sourcing and contracts, purchasing and invoices, supplier relations and procurement steering.
The recent survey conducted between October and November 2020 – engaged 222 respondents who were procurement professionals and influencers from companies (President, CEO, General Manager, CIO, CFO, CPO, head of procurement, buyer, project manager, analyst and specialist) – that had employees ranging from 50 to 1000 with annual revenue ranging from under R1-billion to R10-billion.
An interesting and very refreshing finding from this research – one that can be referred to as proudly South African is that 86% of the country’s organisations are using local suppliers. The survey respondents came from a range of sectors in the country that include Manufacturing, Energy and utilities, Construction, transportation and logistics, ICT, Media and Communications, Retail, Financial Services, the Public Sector and NGOs.
Meanwhile the survey also established that due to the fact that procurement is not at the centre of most companies’ strategies, 82% of the companies surveyed have experienced supply chain disruption and 72% have delayed projects due to the pandemic. However, it is getting increased consideration as companies look to gain from the inherent benefits such as risk management and process optimisation.
“Procurement processes within most South African organisations are not fully optimized. Before any of them even consider adding a digital solution to their existing model, they must ensure that they have taken care of the basics first,” comments Stacy McTavish. Head of Supply Chain COE. Dimension Data Middle East and Africa.
The four key considerations that the survey identified were as follows:
- As companies continue to prioritise cost reduction, they will need to better manage risks and improve the efficiency of their processes in order to see true value from procurement processes.
- South African organisations need to focus on optimising their processes. Digital procurement is an enabler.
- A digital process gives organisations access to large amounts of previously inaccessible data, which has the potential to help them in overcoming the various challenges brought on by the advent of the global pandemic.
- When considering a digital procurement solution, firstly invest in the right talent and technology, then efficiently handle the change management process. This will require boosting internal communications at all management levels and beyond that – this means involving all business partners in the project.
The objective behind greater communication and proper onboarding processes of internal business partners is to ensure better understanding of the role that procurement plays in any organisation; and this ultimately can lead to this strategic function becoming a shared performance driver. Some of research findings have confirmed that 54% of respondents strongly believe that procurement departments are effective and are viewed as strategic business partners.
“With a lot of large organisations still operating in silos, due to legacy issues that have created disparate processes within them, change management will play a critical role in making sure that the migration to digital procurement solutions is relatively seamless and all parties involved buy into the new way of executing procurement processes,” comments Anne-Emmanuelle Grené, Head of Oxalys South Africa. “Another important aspect to consider is that digital procurement solutions are proven, reliable and accessible for implementation and have also shown tangible results within three months, in many regions around the world.”
She further explains that even before the pandemic disrupted the world, the move to the digital way of executing most business functions was already on the cards for a large number of South African companies, so the current circumstances have just increased the need to do it quicker. In fact, 80% of the respondents in the survey also estimate that their organisations will adopt a digital procurement solution in less than three years’ time.
Meanwhile, other key findings include the fact that South African companies have a poor understanding of what digital procurement is, with some assuming simple applications like Excel spreadsheets are enough, while others implementing complex and costly ERP solutions. About 43% of South African organisations have not yet started on their digital procurement journey and 38% of the survey respondents still mostly rely on Excel spreadsheets for automating their procurement processes. However, 80% of the respondents who said they have implemented digital procurement solutions, have reported improvements efficiencies such as better visibility and transparency of processes, reduced cycle times, and better cost control.
Even with this as a backdrop, the South African market looks promising as many local organisations have not been shy to adopt digital solutions to streamline their business processes and procurement should follow this trend because the current and future circumstances continue to demand automation for improved processes, provided that South African organisations adopt the right path and a practical solution to digital procurement.