Dive Brief:
- Digital procurement spend nearly reached $1 trillion on SAP Ariba's platform in 2017, showing the digital revolution has finally taken hold of the supply chain, Supply Chain Digital reports.
- The network announced more than 150,000 new organizations joined the platform in Q3, with more than $5 billion in spend being managed on a daily basis.
- New entrants included companies like global chocolate manufacturer Ferrero Group, The Whirlpool Corporation and Faurecia. Most notable, though, is the platform's growth among small and medium enterprises, such as Sydney-based Muru Office Supplies, according to the press release.
Dive Insight:
The conversion to digital procurement continues to gain momentum and it seems that we have reached the tipping point.
In a growing number of organizations, digital procurement is not an option, but a business practice solidly engrained in supply chain operations for direct and indirect spend. This is not an overnight change, but one that has been growing and gaining critical mass for more than a decade. By now, we understand the mantra of today’s supply chain professional: automate the tactical and focus on the strategic. It seems to be working.
I do worry about the impact on digital procurements on smaller and less sophisticated suppliers, but I do so less these days. In our personal lives, using digital platforms is the norm for buying anything from clothing to a ride to the stadium. Most business operations are cloud-based as well, and our keyboard or mobile device is where we go to get questions answered or to order lunch.
The excuse of not being digitally literate is no longer valid. Suppliers of all types and sizes need to be able to operate in a digital environment or be left out.
And then there is Market Basket, a popular Boston-area grocery retailer. The grocer made international headlines several years ago when their employees risked their jobs on a work stoppage to support the reinstatement of a favored company CEO, fired during a family-focused power struggle. The company trades on their reputation as an old-school supermarket with long-time employees who have deep relationships with loyal customers.
Market Basket is a large, high volume regional chain with a seemingly outstanding supply chain, keeping their stores packed with groceries seven days a week. Their appeal to many is an old-fashioned store focused on the customer. They are the antithesis of Whole Foods, especially the Amazon version. But no longer. Market Basket announced that they have a website, much to the chagrin of a customer who is proud to stand in a long line waiting for the traditional checkout process … and post about it on social media. No self-checkout here.
If Market Basket is planning for a digital future, every supplier, small or large, can join the digital revolution. The cost savings of digital procurement are too great not to take advantage. The power is with the buyer in this situation and suppliers cannot afford to stay on the sidelines and longer.
