Interviews

“Procurement systems will have to ensure seamless adoption”: Vinaya Varma

The scope of e-procurement is vast – essentially it is digitised procurement which helps a buyer to source goods and services from a verified network of suppliers and fetch the best price in the shortest possible time. In the last few years, this basic service has undergone immense value-based changes, optimally catering to the needs of both the buyer and the suppliers. CXOToday has engaged in an exclusive interview with Mr. Vinaya Varma, MD & CEO, mjunction Services Limited.

 

  1. As an organization with long years of experience in e-procurement, what is your outlook on the business and the industry?

Businesses are constantly innovating to catch up with the changing market dynamics. The disruption caused by the pandemic has brought about major transformational shifts in the way businesses connect with other businesses. Digital transformation will be a major driver as enterprises redefine the way they connect with their suppliers.

While transparency along with compliance was a major driver for Procurement systems earlier, the needs now are to connect immediately, interact and engage immediately, reach a network of suppliers who are digitally connected, connect with the source origins, and complete the transaction digitally which includes the entire connected ecosystem of logistics and financiers.

Also, increasingly we are seeing a growth towards adoption of Cloud and Mobility based solutions. As organisations invest in building a digitised database, we will also see an increase in usage of Intelligence Systems, Automation and Predictive Analytics. A priority in the agenda now is also on sustainability, getting to know the last mile in the supply chain.

 

  1. While designing an e-procurement strategy of an organisation, what are the primary customer perspectives to be kept in mind?

Adoption is now the key to success. Many organizations have learnt from past failures. Procurement Systems succeed when designed for supplier experience. Apart from ease of usage, the key factor is the ability of the organisations to be able to build trust on the procurement platform, that the systems will never be compromised and will at all times offer a level playing field to all participants. That is the surest way to grow adoption.

Apart from adoption, the other two A’s which play a key part in the Strategy are agility and ability. Systems and processes have to be agile to the dynamic business scenarios – current situations demand quick changes which need to be supported not at an “as fast as possible basis” but on an immediate basis. Also, Procurement platforms have to have the ability to support multiple procurement strategies which may differ from product-to-product and service-to-service types of buys.

 

  1. What has been the impact of the pandemic on the procurement landscape and how has digitalization helped to control the impact?

The pandemic has been a gamechanger in the e-procurement environment. While embracing digitisation was the need of the hour, the shift in stakeholder mindset has been significant in realising the benefits of digitalisation of the procurement function and the shortcomings of the manual process. Also, procurement professionals could now reach a much larger, verified base of suppliers instantly, track delivery and also to a great extent measure performance. So from a procurement landscape perspective, the organisations are emerging with more robust systems and controls in place post the pandemic.

 

  1. How do organisations get benefited by adoption of e-procurement?

The primary benefits accruing to organisations who have opted for e-procurement include:

  • Reduction in cost of goods and services through efficiency and effectiveness of online procurement process
  • Lower cycle time of procurement – from indent to delivery
  • Reduced cost of procurement functions in terms of effort, time and infrastructure
  • Consolidated and easily accessible repository of all procurement data
  • Paperless transactions helping organisations to contribute their bit towards ESG
  • Complete visibility of spend which helps in better decision making
  • Transformation of procurement function from a transactional and tactical function into a strategic function

 

  1. What are the key trends in the procurement function that will define the sector in the next five years? What role will technology play in it?

Digitisation and building a talent pool will be the cornerstones of the Procurement function. The demands from the Procurement function are shifting from savings only to ensuring a steady supply line, avoiding stock outs, delivering the sustainability agenda, building collaborative platforms and focusing heavily on building a talent pool which would include working with partners who have a fair idea of the domain, be it for strategic buys or indirect spend management.

In times where Social Channels influence decisions, organisations are now being extra careful on matters of Governance and Ethics also. Technology will play a major role as it seamlessly connects all the stakeholders.

 

6. Lastly, what are the challenges in adoption and how can the industry overcome them?

Critical to success would be to understand the needs of the buyers, suppliers and other stakeholders such as transporters, warehouse owners and financiers, who interact with the Procurement platform and rely on them. So, processes have to be designed keeping local needs in mind and prioritising them. Global best practices are the benchmark, but systems succeed when they are developed keeping in mind the needs of the Indian industry. The Make in India push has now made visible a lot of new suppliers, from start-ups to small and medium players. So, Procurement platforms designed to support Indian users and processes have a greater chance to succeed. For example, a two-person supplier organization quoting for an offer of less than Rs 10,000, will not have the time or will make the effort of logging into a complex system to put in a quote – they would rather prefer sending their email or spreadsheet the way they are comfortable with, to the Procurement System which should be collaborative enough to accept this method of communication in a secure and encrypted manner. At the other end of the spectrum, a large Enterprise can also put in a quote running across hundreds of line items in a single offer to the same Procurement system.

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