A featured contribution from Leadership Perspectives, a curated forum for enterprise technology leaders, nominated by our subscribers and vetted by the CIOApplications Editorial Board.
Gomes da Costa (Calvo Group)
Implementation of Information Technologies in Procurement versus
In recent years, the field of procurement has undergone significant and rapid transformation in its processes. Companies and tools have emerged that enable almost complete automation and traceability of all operations. However, it is surprising to observe that only a very small portion of companies fully utilize these resources.
One possible explanation for this situation is related to organizational culture and adaptability to change. Effective implementation of new technologies requires not only investments in infrastructure and systems but also a mindset and practices shift within companies. Resistance to change, lack of familiarity with new tools, and the prevalence of traditional methods can be significant obstacles to the full adoption of process automation in procurement.
In this article, we will explore the barriers and challenges faced by companies in their pursuit of full process automation in procurement, analyzing the influence of organizational culture in this context. We will seek to understand how culture can impact the adoption and effective use of information technologies, offering insights and strategies to overcome these challenges and promote successful transformation in procurement processes.
Many companies that offer electronic purchasing services, data cleansing, supplier consolidation, and SRM have been present in Brazil for over 20 years, but their solutions have only been widely publicized and utilized in the past 10 years, primarily in the country's largest companies. Most current leaders have spent a significant part of their careers using conventional methods that historically worked, despite being less efficient. The lack of established governance and the exchange of information through email are still common, indicating weaknesses in processes and a lack of fairness in dealings with suppliers.
Surprisingly, the greatest resistance to the implementation of new technologies comes from buyers themselves and even their leadership. Due to the nature of negotiations, which involve a lot of face-to-face relationship building, many procurement professionals try to bypass automated processes. In Brazil, there is no specific undergraduate degree for procurement, meaning that all professionals have learned their craft from more experienced colleagues, creating greater resistance to accepting new methodologies within teams compared to suppliers.
It is worth noting that the average age of a CPO in Brazil is around 50 years old. Practically all current leaders did not use these tools when they were buyers. Dealing with a change without fully believing in it can be another indication.
With the advancement of blockchain and the growing concern for environmental, social, and governance (ESG) issues, processes must become more transparent, making governance an essential pillar for all companies.
Perhaps another major difficulty is that hardly anything works perfectly the first time. Unfortunately, many implementation projects fail in the first few months of use. In my experience, I have witnessed professionals transferring their data to excel spreadsheets and continuing to work parallel to the tool. This premature behavior can reveal a weakness in project management.
So what is the path to achieving efficiency in the implementation and use of these tools? Here are some steps for successful implementation:
1. Long-term Philosophy: It is essential to have a long-term vision. Even if the results are not immediate, the company needs to believe in the process. The vision should be documented and communicated, with leaders committed to not abandoning initiatives halfway.
2. Ongoing Project Management: The inclusion of professionals with project management backgrounds in procurement teams is increasingly common and is a differentiator for successful implementation. Moving professionals who are already involved in day-to-day operations usually does not yield good results as routines tend to overwhelm them. Careers in Purchasing Intelligence and PMOs have become one of the best qualifications for a procurement team member.
3. Lean Approach to Processes before Hiring any Technology: A common mistake companies make when hiring technology is focusing solely on the technology itself. Before any implementation, a lean approach to processes is necessary. No solution is plug-and-play, as each company and business have their particularities. By mapping processes (VSM) and identifying opportunities, more informed decisions can be made during the hiring process.
Many companies that offer electronic purchasing services, data cleansing, supplier consolidation, and SRM have been present in Brazil for over 20 years, but their solutions have only been widely publicized and utilized in the past 10 years, primarily in the country's largest companies.
4. Continuous Investment in People: Tools are permanent, but people are not. Proper turnover management can be the reason for the success or failure of an implementation. A study conducted by the Institute for supply management (ISM) in the United States showed that the average job tenure in the purchasing field is approximately 5 to 7 years. Even with an excellent team, new members are inevitable, and they must receive continuous training.
5. Continuous Improvement: Processes need to be standardized, but when it comes to technology, staying updated on new solutions is necessary. The use of AI in procurement processes is already a close reality, with supplier mapping and the use of electronic RFIs performed by AI. The Procurement project team should constantly enhance their skills and learn to synergize with their processes. Having a learning organization culture is the best path to constant adaptation.
In conclusion, organizational culture represents the set of beliefs, behaviors, and traditions that guide a company. In the context of procurement, the greatest challenge for professionals lies in developing and promoting a culture that values the integration of technology and people management. This approach is crucial to achieving success in the implementation of information technologies, overcoming barriers, and addressing inherent challenges, ultimately driving efficiency and positive transformation in procurement processes.
