Innovation in the Vendor Management space has led many businesses to see tapping third-party software solutions as a means to realize today’s dominant management update: digital transformation. While it is true that acquiring the latest tools will help digitize, automate, and optimize procurement processes, the assumption that vendors can do it all for you is wrong – very wrong.
So how can Procurement succeed with a successful digital transformation?
The procurement technology market has seen numerous innovations in the last decade. Far from the single modules that would merely digitize manual processes like requisitioning or sourcing events, technology providers today are beginning to offer truly digital tools — ones that enable true automation and intelligent, personalized analytics.
While it’s true that acquiring the latest tools will help digitize, automate and optimize procurement processes, the assumption that these vendors can do it all for you is wrong — very wrong. In fact, before procurement can even hope to obtain the full potential of these solutions, it needs to lay the foundation for success by tackling a more fundamental issue: master data management (MDM).
Often viewed as a transactional issue needed to ensure that suppliers can get paid, MDM should be a strategic priority for all procurement leaders hoping to run a successful digital transformation. MDM is the critical capability to managing the information supply chain, without which a business’ physical and financial supply chains cannot efficiently operate. Because of this, digital transformation is impossible without an accurate master data foundation. To get that right, procurement needs not a third-party software tool but something more basic: a rock-solid MDM governance model that ensures the accurate, sustainable collection of key procurement data.
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