3 Hurdles of Procurement technology adoption (and why they are not relevant anymore)

A recent study by American Shipper underlined the need for innovation in modern technology for specific transportation procurement. 

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3 Hurdles of Procurement technology adoption

The survey, held in April this year, states that the Logistics Environment is seriously lacking the adoption of procurement technology compared to other industries. To complicate matters further, many Logistics Sourcing professionals are unclear about which technologies are available in today’s market and their specific features. Because of this lack of visibility, very few in the industry have immediate plans to implement procurement technology and kiss their manual processes (Excel crunching) goodbye in the upcoming year. Let’s take a look at the 3 biggest hurdles of procurement technology adoption, and why they are anno 2016 not relevant anymore.

1. Available Technology retains Procurement technology adoption

The report, which was created in partnership with the National Retail Federal, the Retail Industry Leaders Association, and the Transportation Intermediaries Association, cites that professionals complain about the lack of available technology solutions on the market today that are specifically focussed on transportation procurement. Some shippers also say the solutions their organization has in place do not meet their specific needs, mostly because these solutions are NOT specifically dedicated to freight, leaving many functions completely unworkable or the least, causing a high workload for sourcing organizations.

Survey Results

The results indicate that shippers and suppliers are increasingly aware of the benefits of modern-day logistics procurement technology and its potential influence on their procurement processes, however, the majority of the participants stated not to have adopted any tools at the moment.

Only Eight percent of the questioned professionals already used freight-specific procurement technology for Logistics Purchasing activities. Six percents currently make use of their procurement functions inside their existing TMS (transportation management system). And 7% are using automated general purpose procurement systems, according to the report.

The majority, however, are using manual or spreadsheet-based systems. This year, 44% of transportation buyers said they were using manual systems, up from 39% in 2015. Sixteen percent of third-party logistics providers (3PLs) also indicated they relied on manual processes.

2. Available procurement tools lack functionalities

From the respondents, eighteen percent  stated  that current procurement systems in the market do not provide the required functionality they need, approximately the same amount that indicated this as a barrier in the previous survey. Moreover, just five percent of shippers surveyed feel that existing procurement software systems are ‘very good’ at helping organizations with freight sourcing efforts. Twenty-eight percent reported that the current freight procurement  are ‘ good’ and 27% noted to be neutral on this subject. 

3. Lack of technical Expertise

Another barrier to technology adoption was the belief current sourcing systems were already meeting the needs of their organization’s, identified by 27% of shippers. This number decreased significantly, from 45% who had faith in their organization’s current processes last year. Organizational resistance to change was cited by 27% of shippers as a reason for not automating procurement processes, and 7% pointed to a lack of technical expertise needed to make a shift to an automated system as another barrier. Read the full report: 2016 Transportation Procurement Benchmark Study: Analog Strategies in an Omnichannel World

The following items will pass in this report, published by American Shipper. Almost 250 Logistics and Transportation professionals, active in Logistics Purchasing, where surveyed.

    • Whether freight buyers are tying transportation procurement to inventory strategy
    • Whether transportation is part of a company’s omnichannel strategy
    • Whether transportation procurement is more relationship- or technology-based (by mode)
    • Technology usage patterns for procurement and automated bidding
    • How retailers, manufacturers, and 3PLs differ in their procurement pattern

 

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Pieter Kinds

Pieter Kinds

CEO Freightender.com

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