Digital transformation in purchasing

August 17, 2022

The term ‘digital transformation’ is often used loosely to refer to technological improvements in a company’s business processes. There is no shortage of emerging technologies that promise to increase efficiency and transform business processes through digitisation. Purchasing departments are facing increasing external forces that pressure companies to take an innovative approach and adopt these technologies. The challenge is to understand what digital transformation in purchasing means and where to start. This article explains how a successful digital transformation of purchasing relies on automation tools, such as the automated processing of documents and data.

What digital transformation means

Digital transformation can occur in any number of ways, from a retailer adopting an online store in response to Covid-19 to Amazon creating Amazon Web Services. Fundamentally, digital transformation involves leveraging emerging technologies to make positive changes in how a business is run. This includes processes, personnel and technology. These changes make enterprises more efficient, resilient and successful. The term ‘digital’, however, can allude to any number of things. For example, digital could mean paperless processes, moving data and processes to the cloud, AI solutions, data analytics, agile development, remote working, automation or even all the above together.

The 4 types of digital transformation

There are four types of digital transformation:

1) Business model transformation

A radical change to the way a product or service is delivered to the consumer. A common example is how Netflix introduced streaming services, a very different business model to the traditional video rental store.

2) Domain transformation

This form of digital transformation describes an extension of an existing offering. For example, a restaurant creating an online ordering and delivery service allows them to compete in both the dine in and delivery food markets.

3) Organisational (or cultural) transformation

Refers to the implementation of digital tools within a workplace to empower employees and improve a company’s operations. Video conferencing, online project management and collaboration tools are examples of technologies that lead to organisational transformation.

4) Business process transformation

Means replacing inefficient business processes with digital tools that make them more efficient. Netfira’s document automation platform is an example of business process automation as it provides increased efficiency by replacing manual, repetitive work.

Regardless of how people define ‘digital’, digital transformation is about more than just incorporating new technology into business processes. Tech solutions are tools that facilitate digital transformation, enabling businesses to make fundamental changes to a company’s culture and operations. When it comes to business process transformation, this means replacing established, often obsolete, tasks with cost-efficient solutions – this is particularly true for purchasing.

Why purchasing processes need to be transformed

Purchasing departments process a high volume of transactional documents. B2B documents such as quotes, order confirmations and invoices need to be checked, compared and verified. Manual document processing is still common in many departments. However, processing data and documents manually is slow, error-prone and inefficient. Mistakes, delays, slow reaction times and deviations stifle smooth business processes, burden supplier relationships and lead to unnecessary costs. Further, unlike scalable automation tools, manual operations are limited in their ability to respond to an increase in the volume of documents. In a global digitised B2B world that struggles with supply bottlenecks and major supply chain disruptions, purchasing needs to be efficient, flexible and reliable. It is necessary to modernise and optimise purchasing processes to transform procurement into an agile and future-proof business partner.

Business process transformation in purchasing

The purchasing process is defined as a process used to purchase goods and services via a supply chain. A widespread synonym is the Procure-to-Pay (P2P) process.  The steps along the P2P process always involve exchanging data and documents with business partners and approving them. That is why buyers must check, compare, and validate information before further processing. Business process transformation involves radically changing the elements of purchasing processes to meet new business goals. By transforming the P2P process, purchasing departments strive to modernise their workflows, incorporate new technology and save costs. AI applications, app technologies, cloud computing and other advanced technologies can help purchasing update or replace slow, error-prone, and expensive manual processes.

Why the digital transformation of the P2P process relies on automation

While some people equate automation with digital transformation or consider automation one aspect of digital transformation, digitisation should be seen as a first step towards automation in purchasing. Digitisation describes converting non-digital information, like a hard copy, into digital data. Today, digitisation also means the digital networking of processes and products in real-time with the growing size and complexity of data structures.  Automation, on the other hand, improves processes that are already digital. It relies on a series of rules to accomplish tasks without human intervention. Automation through information technology or machines can replace repetitive processes and tasks while freeing humans to do other tasks. In purchasing, digitisation is often the first step towards automation as information needs to be available digitally to any automation technology before it can be automated. In the end, the digital exchange of data and B2B documents along the P2P process needs to work automatically to make purchasing more efficient and future-proof. 

Automated document processing: the core of digital transformation in purchasing

The Netfira Platform transforms operational processes by automating the transactional document exchange. The platform automatically extracts information from B2B documents such as shipping notices, invoices and order confirmations and exports it into any downstream systems. For documents without deviances, the Netfira Platform offers fully automated processing thus completely erasing the need for manual work. When a discrepancy is identified, the tool allows the buyer to edit the data and avoid disruption. That way, buyers can process a high volume of documents and data efficiently.

Benefits of the digital transformation in purchasing

There are many benefits of a digital transformation in purchasing.

Empower your employees. The Netfira Platform as a part of companies’ digital transformation strategy enables purchasing teams to focus more on value-generating activities rather than repetitive manual tasks. The AI-powered SaaS solution replaces manual data entry with intelligent automated data processing. The resulting time savings allow employees to get more tasks done, without interruption.
Improves cross-departmental collaboration. The implementation of the Netfira Platform improves the collaboration between the accounts payable department and purchasing, while also relieving the internal IT. Thus, on individual, team, and organisational levels, the digital transformation of purchasing processes can streamline cross-functional operations, enhance alignment between departments, and strengthen a company’s culture.
Optimise your operations. The platform offers users better data quality with increased transparency and efficiency.
Grow with confidence. Facilitates a cultural shift that strengthens buyers’ digital capabilities. This will equip businesses with an agile, digital-savvy workforce that ensures sustainable business growth.

The Netfira Platform, which relies on AI and operates in the cloud, enhances workforce performance. The digital automation tool eliminates repetitive manual tasks, allowing employees to work more efficiently and effectively. Learn in our blog post how digital transformation tools future-proof the procurement manager’s role.

Conclusion

The automated processing of documents is the key to a successful digital transformation in purchasing. Automating transactional documents means efficient and smooth purchasing processes, transparent workflows, real-time information, short reaction times, seamless B2B communication, and more time for strategic tasks in purchasing. Business process transformation through digital automation solutions like the Netfira Platform not only eliminates manual tasks but also improves data quality, facilitates a cultural shift in the purchasing department to a modern and efficient work style and relieves employees.