Procurement has been at the forefront of adopting cloud-based digital platforms enabling efficient transacting processing . This transition to cloud that started with indirect purchasing has accelerated to direct materials . Key purchasing functions have gone a step further by building an ecosystem of solutions offering rich automation and intelligence lowering transaction costs by an average of ~ 30 %.

Some industries like oil and gas have lagged in digitalization due to a mix of high regulations , significant variations between upstream and downstream and history of acquisitions . Figure 1 . lists some of the typical challenges these industries face in their procurement value chain .

• Blocked invoices

• Lack of invoice status visibility

• Lack of control in text based requisitions

• Cumbersome vendor collaboration

• Lack of decision support for approvals

In our experience , such companies can accelerate their digital transformation journey by adopting an approach based on four key principles – a clear view of applications at the core , automating and optimizing in parallel , AI as a central part of data operations and building an agile culture .

Digital Core : Transitioning from a jigsaw of legacy applications to a user-friendly digital platform starts with a clear definition of process that need to be part of the core and those that need to be part of the surrounding ecosystem . User experience needs to be at the center of this decision and supported by seamless data and process flows . We recommend associating productivity and cycle time KPIs with user experience to make this a quantifiable benefit .

Automation : Process variability and disjointed workflows are prevalent in most organizations . While in an ideal scenario , streamlined processes are first developed and implemented , driving automation in parallel can release investments and capacity required to drive larger transformation programs . Looking ahead , these automated KPI driven processes form the cornerstone of the new solution .

AI and data : The challenge of combining meaningful data for analysis and transaction processing has long existed . A bill of material that is common across supply and demand , item master with the right attributes , and supplier masters with well-defined descriptions are examples of elusive essential building blocks . This is one area where AI is playing a significant role in both helping clean current data sets and merging information from new data sets to provide meaningful reporting with a significant positive impact across procurement KPIs .

Agile mindset : Most large companies have followed a traditional waterfall approach with multi-year timelines and complex program structures . Even companies claiming to

• Under-exploited early payment discounts

• Delayed payments

• Receipt Settlement

• 2-3-4-way match

• e-Invoicing

• PO-flip

• Vendor Managed Inventory

• Automated Approval Workflow

• Exception Management

Resolve

Receive Invoice

Transact

Approve

• Maverickbuying

• Non-compliantspend

• Disparate / fragmented landscape

• Un-intuitive UI

• Ineffective knowledge-sharing

• Supply Chain Financing

• P-cards

Pay

Pay

Procure

Request

• e-Requisition

• Guided Procurement

• Dashboards

• Categorization

• Spend Analysis

• Sourcing Strategy

Assess

Fragmented process

• Supply chain disruption due to supplier risks

• Incorrect spend categorization

• Poor savings visibility / category

• Absence of fraud prevention

Source

Contract

Evaluation

• Performance Management

• Classification

Enable

• Onboarding

• Contract Lifecycle Mgmt .

• Digitize Contracts

• Clause Standardization

• Approval Workflow

adopt agile are largely adopting the waterfall-based QA stage-gate process . Adopting agile requires the upfront allocation of the right team with end users , solution developers working in close co-operation and acceptance of imperfect product versions as a natural part of developing the solution . This fast iterative cycle and close co-operation cuts the project delivery time significantly and has been proven to enable radical simplification of end-to-end processes .

In summary , a mix of clear vision , new technologies , and an agile mindset is already enabling leading purchasing functions to accelerate procurement digital transformation . The timing is right for all organizations to accelerate their journey to procurement 4.0 .

• eRFx

Identify

Contract

• Supplier performance not linked to procurement decisions

• Poor supplier risk assessment

Negotiate

• Tender Mgmt

• Qualification

• Bidding Process

• Reverse Auction

• Rudimentary quote comparison

Process

Activity

Capability

• Challenges

• Limited category strategy

• Unstructured cost reduction initiatives

• Lack of collaborative platform

• Insufficient buyer productivity

• Manual sourcing process

• Poor identification of sourcing opportunities

• Low contract compliance

• Cumbersome contract obligationmgmt .

• Long contract lead time

© Infosys Consulting

Robin Goswami

Senior Vice President , Global Head – Energy ( Oil and Gas ) Practice , Infosys Ltd .

Robin Goswami is a Senior Vice President and heads the Energy ( Oil and Gas ) practice in Infosys . Goswami has been instrumental in building the oil & gas practice in the organization since its inception to its current stature . He is a transformative leader with over two decades of experience in the IT industry . He is also a member of the board of directors of two companies - an IT consulting firm acquired by the Infosys Energy practice , and a global consortium that sets data exchange standards for the Upstream Oil & Gas industry .

© 2019 Infosys Limited , Bengaluru , India .