Digitalization in Purchasing: Evaluating Ideas and Trends Report

This report examines the impact of digitalization on purchasing management, drawing from various sources to evaluate the ideas presented by different authors. It highlights the benefits of digitalization, such as improved efficiency, better customer experience, and enhanced procurement value through elements like Big Data and IoT. The report also addresses challenges like trust, security, and the need for employee training. It further discusses the role of e-procurement technologies, associated risks, and the importance of adapting to digital transformation for long-term success. The analysis concludes that while digitalization offers significant advantages, a comprehensive understanding and strategic implementation are crucial for maximizing its benefits in purchasing management.

Purchasing management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Evaluating the ideas of author presented in articles....................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Purchasing management is a management performed by company which involves
managing order, receipt, approval of items. This in turn plays an important role in customer
satisfaction. The digitalization era also changes the purchasing process and companies start
using digital technologies in order to provide new revenue and increase the opportunities. This
in turn also assists to enhance the procurement function. With regard to this, the current report
will shed a light upon digitalization within purchasing that accelerates the pace of procurement.
For that, the report will choose different secondary sources in order to evaluate the ideas
presented by different authors.
MAIN BODY
Evaluating the ideas of author presented in articles
By referring the article by Bauer, nowadays, digitalization is a part of every aspect from
smart phone to deliver products automatically. So, with the constant spreading of digitalization
and modern technologies, procurement function become easier because it saves the time of
companies. To cope with the changing environment and keep up with increasing pressure of
innovation, buyers need to accept the changing in purchasing. Bauer and Göbl (2019) critically
analyzed that the systems of procurement are not well-established in all companies and
strategies to overcome from the challenges are not implemented. That is why, most of the
companies did not focused, however the system assists companies to improve the business
operations.
From the results, it has been also reflected that with new capabilities arising from
digitalization and industry, there is a need to get more attention over the procurement. In this,
ePocurement was the first step to support the execution of procurement functions. Also, with the
help of performing t-test it has been evaluated that there is no influence of digialization on
efficiency in procurement departments by considering different age group people. I am also
agreed with the results provided by article because digitalization in purchasing assists to deliver
the value that provide a better customer experience, along with this, also assist to improve the
performance.
On the other side, from the article it has been also evaluated that with the rise of industry
4.0 different new technological element such as Big data, internet of things and Augmented
Reality will be developed. These elements assist to make a possible flow of communication
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between the different systems. In my opinion, I think that digital procurement assist to enhance
the procurement value by better presenting the insights to the stakeholders. These elements
automatically collect information about suppliers and not just improve the performance but
provide critical; information regarding financial results, trend within market etc. That is why.
Digital procurement transformation also assists in increased transformation speed and lower
down the cost so that company can invest their amount and time towards another department.
Overall, it can be stated that with the growing competition as well as companies urge to
be successful in market, they have to cope up with digital transformation within their
procurement functions so that it will be easy to use resources within the shortest possible time.
Also, digitalization does not only create positive impact over the purchasing but there are many
challenges faced by the company that might affect the overall performance into opposite
manner. However, there were many systems already introduced by the companies in order to
improve the efficiency but with the evolution of digital era, the systems has been replaced in
order to generate the best outcomes.
From the article written by Bienhaus and Haddud (2018) it has been evaluated that there
are several benefits offered by the digitalization in procurement which includes supporting daily
business within administrative task, helps in complex decision-making process, strategic
formulation etc. With the current situation, the disruptive and fast changing business i.e.
digitalization is considered one of the top management-level agenda for an organization because
it helps in earning profit. Belisari, Binci and Appolloni (2020) also highlighted in their study that
Big Data as well as Internet of Things are recognized as a critical success factor in order to share
the information to their customers and reliable sources. As per my view, digital transformation
assist to foster the development of common functions of procurement. However, Masudin and
et.al., (2021) also critically evaluated that trust and security are two main challenges for digital
transformation especially to the virtual information flows and automated transactions. As
technology's main purpose is to develop a trust between the buy and suppliers and this can be
improved when both parties shared information and there is no miscommunication.
The findings of the article shows that AI, Big data and IoT are some key elements regard
to procurement that helps business operations to improve the overall performance. Thus, there is
a need to strengthen the transparency and traceability that assist to build the relationship with
buyers. I am also agreed with the statement because with the changing working environment, it
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becomes quite difficult for the companies to grab attention of buyers and for that companies are
pressurized for adopting innovative practices, This in turn, assists in enhancing the capabilities
of a company along with sustaining a brand image. Seetharaman and et.al., (2020) also
supported that organizations must have to understood the revolutionary impact of digitalization
because supply chain management as well as risk management tools are not aligned with digital
process. The article highlighted barriers as well as relationship with the digitalization which
indicate that employees are not aware with the concept and not enough experienced in order to
handle the complex situation. That is why, I think enough expertise should be provided before
making any decision.
Overall, it can be stated that there is a need to increase the connectivity between
procurement and digitalization, for that management level have to make initiatives in which they
must connect with cross-functional teams in order to create a positive working environment.
Also, it is a new concept for the employees and might be they did not understand the concept,
for that managers guide employees in order to ensure the sustainable long-term success. Hence, I
examined that with the changing work process, it is necessary for top organizations to increase
the amount of virtual information that helps to make the decision effectively. This in turn further
help to grab attention of many customers and meet the defined aim of a company as well.
Through the article, written by Davila, Gupta and Palmer (2003) online procurement is
considered one of the most important element for business's operational excellence within large
organizations. This in turn assist to increase the performance of a company and in most cases,
the company present attractive value proposition that reduce the cost and cycle times by using
different software. The findings of the study also reflected that e-procurement technologies will
become an important element within a management of supply chains. In my opinion, small
organization are also practicing investing upon such software or digitalization procurement in
order to improve the business operations. Along with this, focusing upon capabilities and
resources will be more beneficial for the companies so that effective results can be generated.
As per the views of Mafini, Dhurup and Madzimure (2020) there are many risks
associated with the e-procurement technologies which companies might be aware of like internal
or external business risk, technological, e-procurement process risk that might affect the
business performance. For example, due to lack of understanding regarding technological aspect,
e-procurement might lead to cause cyber crime in which important data from the company stolen
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which might affect the business performance in opposite manner. As per my ability, I am also
agreed that changing the procurement system into digitalization increases the chances of risk and
that is why, company may fail to deliver the benefits which was actually expecting. Therefore, it
can be stated that with the help of effective e-procurement software which require larger
investments as compared to alternative e-procurement technologies that explains large
corporations are recognized as a main adopter of this technology. This in turn also have a
positive impact such that it reduce the number of suppliers who actually associated with cost
benefits. I am also agreed with the statement because while implementing digital procurement
then there might be risk linked that causes opposite impact.
Hence, the adoption of digital technology for procurement helps in smooth business
operations. Also, Chepng’etich, Waiganjo and Ismail (2020) examined in the study that there are
e-procurement technology models which in turns assists company to generate the best outcome
and manage the flow of communication in order to minimize loopholes. For example, e-
procurement software, internet market exchanges, internet B2B auctions and internet purchasing
consortia etc. In accordance with my opinion, it can be stated that once the technology become a
controlling design then industry automatically moves to the rapid growth till it reach to the
maturity stage. Thus, there is a need to be prepared for all the business cycle stage in order to
generate the best outcome and comply with changes as well.
By referring the article Supply management an e-procurement, it has been evaluated that
e-procurement is the application of internet technology which is a major component of
purchasing process. Though the concept was already evolved but with the changing working
environment, new system or model has been evolved. Such that the use of internet also assist
buying firm in all stage of the supplier selection process. For instances, FreeMarket is the online
sourcing through reverse auction process, and now it is one of an emerging leader in the era of e-
procurement. Presutti Jr (2003) also supported that procurement must changed into the
digitalization because there are many official sites through which buyer post a request of
proposal through internet mode. This types of bid can be reviewed by all and that is why,
company may adopt the best order out of many. As per my opinion, I also agreed with the
statement because there are many software developed within a company that support business to
minimize the cost of investment. For example, Oracle Corporations developed its own 'procure-
to-pay' solution which automated complete procurement cycle. In this, spend analysis, strategic
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sourcing and supplier collaboration re involved that assist to save the cost of the company up to
10 to 20%.
Chen and et.al., (2021) also emphasized that it is on of the comprehensive measure of
profitability as compared to traditional measures. It is so because it indicates how well the
company is performed regard to amount of capital invested. This is also relied upon the advance
technology and that is why, assist firm to improve as well as maintain the revenue growth. I also
supported the discussion because most of the company faces irregular spending which is a
biggest challenge for most of the procurement organization. At that time, there is a need to
manage the policy or tighten the laws so that company make control over the spending.
However, on the critically note, it has been evaluated that Albinkalil (2021) digitalization and
procurement have a positive relationship because the tools sets application which are attained by
the firm and this in turn improve the purchasing experience from end users. Along with this,
there are consistent output generated by digital procurement without affecting any other
departments.
Overall, from the article, it can be identified that it is not a new to comply with digital
technology but it also helps to accelerate the procurement transformation journey and that is
why, there is a need to understand the concept so that it do not affect the performance. I also
agreed with the same, because having enough information and understanding regarding the
procurement digitalization might assist to grab the best opportunities so that effective results can
be drawn.
CONCLUSION
By summing up above report it has been concluded that purchasing management plays
an important role in the company's operations. From all the selected articles, it can be stated that
there are both positive and negative side of digitalization and its relationship with procurement.
It is depended upon the company how to tackle the technological, internal and external risk
because it might affect the business performance. Therefore, from all the articles, it can be
summarized that there is a need to change the procurement system so that it helps business to
improve the business operations.
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REFERENCES
Books and Journals
Albinkalil, A. M., 2021, March. Impact of E-procurement on Supply Chain Performance.
In European, Asian, Middle Eastern, North African Conference on Management &
Information Systems (pp. 133-143). Springer, Cham.
Bauer, F. and Göbl, M., 2019. The influence of digitalisation on procurement efficiency. Journal
of Applied Leadership and Management. 7. pp.50-65.
Belisari, S., Binci, D. and Appolloni, A., 2020. e-Procurement adoption: a case study about the
role of two Italian advisory services. Sustainability,.12(18). p.7476.
Bienhaus, F. and Haddud, A., 2018. Procurement 4.0: factors influencing the digitisation of
procurement and supply chains. Business Process Management Journal.
Chen, Y. and et.al., 2021. E-procurement system adoption in local governments: the role of
procurement complexity and organizational structure. Public Management Review, pp.1-
23.
Chepng’etich, C., Waiganjo, E. and Ismail, N., 2020. Influence of Strategic E-Procurement
Practice on Performance of Devolved Systems of Government in Kenya. International
Journal of Supply Chain Management. 5(2). pp.17-27.
Davila, A., Gupta, M. and Palmer, R., 2003. Moving procurement systems to the internet:: The
adoption and use of e-procurement technology models. European management
journal. 21(1). pp.11-23.
Mafini, C., Dhurup, M. and Madzimure, J., 2020. E-procurement, supplier integration and
supply chain performance in small and medium enterprises in South Africa. South African
Journal of Business Management. 51(1). pp.1-12.
Masudin, I. and et.al., 2021. Impact of E-Procurement Adoption on Company Performance:
Evidence from Indonesian Manufacturing Industry. Logistics, 5(1), p.16.
Presutti Jr, W. D., 2003. Supply management and e-procurement: creating value added in the
supply chain. Industrial marketing management. 32(3). pp.219-226.
Seetharaman, A. and et.al., 2020. The impact of E-procurement systems in the biomedical
industry. Journal of Accounting, Business and Management (JABM). 27(1). pp.66-85.
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