People. Planet. Profit. These ‘3 Ps’ have been the foundation of business in the modern era. This approach recognises that a company’s impact goes beyond financial gains, extending to the wellbeing of individuals, the health of our planet and the long-term sustainability of the business itself.
The tangible benefits practised by corporations such as Ben & Jerry’s and Unilever include lower energy consumption, higher employee retention rates, improved productivity and enhanced brand perception.
However, in today’s fast-paced and digital world, a fourth P has emerged: ‘Platform’. From a procurement and supply chain perspective, technology platforms have surfaced as indispensable tools for businesses. The importance of incorporating new technology platforms isn’t just a matter of staying ahead – it’s a matter of survival. Consequently, organisations and their procurement functions that resist or neglect the adoption of cutting-edge technologies risk falling behind their competitors and missing out on a multitude of opportunities.
There are many reasons why investing in new platforms is essential in the modern day for business to improve efficiency and effectiveness. With that in mind, there are three key challenges of doing nothing, see below.
Our 4C Transformative Procurement Survey demonstrated that firms were lacking robust systems to perform key procurement and supply chain activities, with the most used tools focused on contract management, basic sourcing activities and purchase-to-pay. Without widespread use of tools, poor contract management costs businesses an average 9% of revenues per year according to Forbes. This problem is often accentuated as many corporations don’t have a secure contract repository. This means contracts are on paper, in emails and in shared folders which risks sensitive information falling into the wrong hands. A recent report by Verizon highlighted that 95% of organisational data breaches led to average losses of $30,000, in some cases reaching as high as $1.6 million.
Multiple contracts with different regulations mean understanding which are relevant and applicable in each scenario can be difficult. An advanced Contract Lifecycle Management system (with deep-AI enablement) will drastically simplify this process and ensure compliance consistently. Recent Harvard Business Review article (Rich, 2018 and Gardner & Matviak, 2022) found that UK organisations lose between 5-40% of the contract value when not closely supervised or managed through effective contract management.
Organisations must differentiate themselves from the crowd to attract and retain the most skilled workforce in a highly competitive talent market. Outdated procurement processes act as a signal of investment in the future and will prevent organisations from accessing the best within the labour pool. Recently, a study from a software company ToolsGroup, found that 41% of the procurement and supply chain organisations canvassed proposed that ‘skill deficit’ with specific alignment to procurement technology professionals will be the biggest challenge over the next few years.
At 4C, we determine sustainability to be more all-encompassing. In fact, our methodology and associated advisory is predicated on ‘4 Es’ rather than ‘3 Ps’ – Ethical, Environmental, Economic and the ERP (Enterprise Resource Planning).
Our research in the Transformative Procurement Report highlighted that despite being high on the list of strategic and procurement issues, over three-quarters of organisations have a limited approach, at best, to sustainability. It is perhaps not surprising, therefore, that investment in sustainability initiatives is at best ‘limited’ for most organisations (88%). The lack of investment in technology solutions to support these initiatives would paint an even worse picture. To be more specific, according to our data, less than 5% of organisations had a fully developed and comprehensive sustainability approach covering the ‘3 Es’, let alone enterprise-based technology solutions.
Now, whilst the overarching ERP ownership does not traditionally sit within procurement and/or supply chain functions remit, the functional process design, vendor master data, sourcing, category and contract management modules typically do. That is strategically important when comprehending the evolving ERP sustainability story. Fundamentally, this is because significant amounts of processes and data relating to sustainability reside inside the ERP.
Therefore, it could be suggested that an organisation’s ERP is central to the perpetual sustainability story. This can be substantiated by a recent IBM report that found 47% of sustainability data is already collected in an organisations ERP. This is expected to increase to more than 55% by 2025.
Whether it is sustainability in a more traditional sense, ERPs in a standalone capacity or the futuristic 4C viewpoint around our ‘4 Es’ framework and how we are supporting and advising our clients on wider-sustainability and digital strategies, please feel free to get in touch with us via one of our Partners, Allison Ford-Langstaff or Mark Ellis, or Head of Digital Innovation, Joe Gibson. We’re always happy to collaborate, share knowledge and support.