PwC Digital Procurement Survey 2022 - 4th edition

07 Apr 2022

Digitalisation of Source-to-Pay processes is the ‘new normal’ for procurement departments

PwC Global has released the fourth edition of its global study of the digitalisation of procurement functions. More than 800 companies were surveyed across 60 countries and 17 industries to provide a comprehensive overview of worldwide themes and trends in procurement.

Digitalisation not an automatic win

Investment in digitalisation of procurement functions has brought mixed levels of success for organisations. While digital transformation is progressing on the roadmap of procurement functions (up 18% from last year) – largely driven by compliance and risk management – cost reduction (+37%) and strategic sourcing (+24%) remain the primary reasons for migrating to digital procurement. 

“This year’s Digital Procurement report shows that digitalisation of source-to-pay processes has become the new normal and baseline for procurement departments, with 90% of survey respondents using source-to-contract (S2C) or procure-to-pay (P2P) solutions, and 77% using both,” says Suleman Jhavary, Retail and Consumer Leader at PwC South Africa.

Companies that have achieved a high level of digitalisation of their procurement processes have largely managed to create value thanks to the availability and quality of their data. However, more than 50% of procurement departments still have difficulty in exploiting their procurement data. 90% of respondents said they were also concerned by cyber-threats and 27% had already experienced a security breach.

Digital procurement of the future

In terms of digital roadmaps to 2025, organisational and human components were seen by survey respondents as more important to digitalisation strategy than specific technical solutions. Small (+44% from 2020-2022) and medium-sized (+55%) companies plan to significantly increase their investments in digital transformation of their procurement function, while large and very large companies aim to maintain their investments.

Digital roadmaps reinforce orientation toward traditional use cases – S2C and P2P are both up from 2020-2022 – but two emerging digital use cases are supply chain traceability and monitoring of suppliers’ CO2 emissions (Environmental,Social and Governance).

“Tracking supplier CO2 emissions is expected to become a ‘game changer’ for purchasing departments, with 27% of companies already using or experimenting with the tool via proof of concepts (POCs) with this emerging technology,”  says Retief Ferreira, Procurement Leader at PwC South Africa.

Blockchain technology has not made significant headway in digital procurement, with 60% of purchasing departments perceiving no value from its implementation.

Sub-Saharan Africa versus global trends

Despite global changes in cost bases caused by the Covid-19 Pandemic, Sub-Saharan Africa (SSA) has managed greater cost reduction than the global average (42% compared with 37%), which has had a positive impact on margins and profits in the region.

Africa’s harnessing of procurement data to create value is rated as good, with significant further investments to come in support of digital transformation. 

Against global averages, investments in digital transformation by SSA’s small and medium-size enterprises, and large companies are €360 000 and €1.59 million against €580 000 and €1.75 million respectively.

“Supplier sourcing in the SSA region is 8% higher than global averages and the collaborative portal is 20% above the global benchmark, reflecting great connectivity and relationships with many suppliers to ensure required goods and services are provided on time and at the desired quality and price. This has contributed to the region’s resilience through the pandemic,” says Ferreira.

“However, SSA lags the global average in change management investment by 20% and sustainability compliance is not yet up to global grade. Underinvestment in change management could reduce the region’s adaptability in the face of ongoing uncertainty related to the pandemic and geopolitical events,” he adds.

Globally, talent retention and upskilling have barely received attention (2%) and in the SSA region there has been no movement at all – potentially putting at risk the sustainability of digital change and transformation in the sector over a long period of time. 

The top success factors identified by respondents globally were involvement of internal stakeholders, adaptation of existing processes and change management investment. In the SSA region, companies viewed adaptation of existing processes, involvement of internal stakeholders and reviews of best practices to modify existing processes as their most important tasks.

Bringing the strands together

For both global and SSA procurement departments, cost reduction and supplier sourcing are top priorities, though procurement professionals in SSA lean more toward change management as an area that requires more focus in the future. This is understandable in the context of current global supply chain disruptions and increased raw material and transport costs.

“Digitalisation and remote working have become commonplace, with companies in all sectors viewing remote working and digitalisation as baseline requirements. This year’s report shows that SSA needs to focus on change management to ease the transition process of adopting new technology, while ensuring that procurement professionals can reach their business objectives productively in a changing environment,” says Jhavary.

 

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Verena Koobair

Verena Koobair

Integrated Content Lead, PwC South Africa

Tel: +27 (0) 11 797 4873

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