Best Practices for Successfully Adopting Direct Material Procurement & Sourcing Platform

Direct Material Procurement & Sourcing: Optimize Your Supply Chain

Ever since McKinsey reported in 2021 that 70% of large-scale organizational transformations fail, there have been countless cautionary tales warning companies what to avoid when implementing digital technology. An article recently published in Harvard Business Review sums up the general consensus: “You have to walk before you can run.”

There’s no doubt digital transformation has already affected direct material procurement, with AI platforms enhancing decision intelligence by providing access to information and insights that sourcing professionals otherwise wouldn’t have. If, in the past, direct material procurement has been under-addressed by software, leaving many to compensate by using spreadsheets and email, sophisticated technology now affords sourcing teams the ability to “bridge the decision abyss” and see all their data on one platform, a streamlining that improves overall performance. With the right platform, procurement professionals can leverage data to find and negotiate better prices with their suppliers and optimize supply chain risk, among other significant benefits.

However, agreeing to invest in a platform is one thing. Successfully adopting it to realize its value over time is something else entirely. For this to occur, change has to be effectively managed, and setting expectations with executives and users is crucial. The following best practices will put you on the right path to success.

Clean and accurate data is the foundation. Organizations have hundreds of thousands of parts across a product portfolio, which means there’s a ton of data to analyze. A platform can turn this data into actionable insights, but only if the data is clean. Accurate data builds trust in insights, which is the foundation of the adoption journey. Inaccurate data, in contrast, hinders adoption, causing the whole endeavor to be a waste. However, although having messy and inaccurate data isn’t ideal, a platform can highlight this for an organization in ways a manual review cannot, compelling them to clean data up ahead of their transformation journey. It will take work, but it’s worth it.

Act on insights. Once an organization has trust in its data, the validity of the insights becomes more valuable. This is game-changing for direct material sourcing, particularly at a time of market volatility. For example, platforms can improve risk mitigation, whether product, commodity, manufacturer, or geographic risk, allowing you to adjust your supply chain relationships and diversify or mitigate accordingly. In addition, platforms can also help you see where you’re paying different prices for parts in your supply chain, resulting in cost savings. Whatever your immediate needs are, by incorporating insights into your workflows, you can start to track which ones you take advantage of, helping you demonstrate ROI to the C-suite.

Go above and beyond. As you begin to address your pain points and further integrate your platform into your workflow, you can more effectively collaborate upstream with the Product Development and Engineering teams and downstream with your suppliers and contract manufacturers to bring new products to market, reduce time to market, and optimize the cost and risk of existing products. This will set you apart from competitors, most of whom are struggling to transform at a basic level.

Change is difficult and adoption takes time. As one of my mentors taught me, digital transformation is a marathon, not a sprint. Instead of trying to do everything at once, it’s important to understand the key pain points of your organization and productively prioritize them. Digital transformation is daunting, but your organization doesn’t have to be another story of failure. By keeping in mind the best practices for adoption, you’ll get more out of your direct material sourcing platform than you ever imagined.