The impact of the cloud on procurement:- Procurement is projected to be a continued critical component of the supply chain function, by assuring the availability of vital inputs to processes in organizations. Any disruption to the supply of these critical inputs can be disastrous for many industries. Imagine a healthcare supply chain facing disruption of medical supplies.

Procurement functions often operate in a siloed fashion. This critical drawback leads to poor supply-demand dynamics, duplicated workflows, inventory buildups, and high Total Cost of Ownership.

The impact of cloud on procurement as benefits:

  1. The speed of operations, through enhanced visibility. A buying selling community is created where information is shared real-time and products can be exchanged in a timely manner. This improvement in materials velocity through value streams reduces overall supply chain Total Cost of Ownership.
  1. Increased Collaboration, through systems integration. The cloud serves as a supermarket where transactions can be executed, and integrated perpetual inventories maintained. This leads to a true understanding of materials movement and requirements.
  1. Enhanced Inventory Management. The cloud makes it easier to manage inventory, especially when integrated with blockchain mechanisms. Buyers and sellers can see inventory levels move in real-time and make effective replenishment decisions. Streamlined Kanban and replenishment triggers are other efficiencies increasing mechanisms that are enhanced Integrated cloud systems.
  1. Point of Failures Reduction. Integrated cloud systems streamline and reduce duplicated processes between buyers and sellers. This action reduces errors, wastes, and reduces Total Cost of Ownership. The reduction of points of failure reduces risks and probability of disruption.
  1. B2C experience in a B2B environment. Cloud-integrated systems make the accountability and rigor of B2C platforms a reality. This has led improved synergy, efficiency, reduction in cost, and improvement in product and service quality

While the benefits of cloud-based systems are numerous, the following points must be noted:

  1. Resistance to change can be prevalent
  2. Cost of implementation can be high
  3. Return on Investment may take time to be realized
  4. Adjusting to new cloud-based systems can be time-consuming

NLPA Library: Looking for authoritative procurement templates, tools, webinars, and more?  Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in the NLPA Library.

David Millington

David Millington M.Sc.QSM, NPDP, CL6σBB, SPP, SPSM3®, CM® Director of Education (Next Level Purchasing Association) A Certified Strategic Planning Professional, David Millington brings over 18+ years experience in the Strategy Execution, Product / Service Development, Organizational and Supply Chain Excellence Arenas. He is a Certified Supply Chain Professional, Certified New Product Development Professional, Certified Strategic Planning Professional, and a Certified Lean Six Sigma Black Belt. David holds a master’s degree in Quality Systems Management, from The National Graduate School of Quality Management, Falmouth MA, USA. This equips him with mastery of vast bodies of knowledge and best practices. David Millington brings hands-on experience at VP, Director, and Manager Levels, guiding and facilitating the development of strategic and tactical solutions to intricate organizational, product, and service challenges.

More Posts