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Digitization of procurement

The digital journey can be long and expensive. Especially if we haven’t started yet and try to leapfrog. Most of my career was in SME’s and investing in IT was a wish of many, but not always possible. This forced us to take the journey one step at a time. And the first step was digitization.

Digitization and digitalization. What is the difference? Digitization is defined as replacing a paper process with its digital counterpart. So, no change in the processes, except that they move into digital space. For example. replacing a paper purchasing order with a PDF file is digitization. Digitalization, on the other hand, deals with having processes improved using IT technology. Having the same PO sent by the system for approval and then straight to the supplier is digitalization.

As told, digitalization can be expensive. And digitization can help as well to make the current process a bit faster and more efficient. Also, it serves as a gateway to digitalization. There are several processes that we can move to digital. In my career, I have done them independently. This helped the people to adopt. Also, the cost was not huge. And once one or two areas go through a successful transformation, it gets much easier to get approval for the next step.


Tendering is quite easy to outsource There are plenty of options. It gives as well very visible results in time and cost-saving, So a good start if the management is hesitant to spend. The software sends out the RFQ to many suppliers and asks them to provide prices and other terms, usually in the system’s portal. Once the bidding is over, the user gets a full overview and comparison of the received bids


Auctions are the next step in the sourcing process. They are very often an option of the tendering process. The big benefit of e-auction is that bidders stay in their office while in the auction. This allows internal consultations during the bidding, resulting in better prices. It is as well much faster than having several rounds of negotiations with suppliers. A usual e-auction takes about half an hour and results in a final price that can be immediately contracted.

Signature of PO

Signature of PO is easy to digitize. And it is very visible throughout the business as it removes the burden of carrying papers around the building while chasing signatories. Furthermore, most of the systems have an archive and logging system, hence it is easy to find an old document. In one of my jobs, we have done this for about 60 USD per month. The system had the ability to document signature on PC and mobile. Procurement was getting the signed LPO straight to the inbox, together with a full audit report.

Contract signature and management

Contract signature and management would then be the extension of the PO signature system. You may need to extend the ability of the system and allow outside signatories (suppliers) to sign. And you have all your contracts digitally signed and in one place.

Even if this is not possible for any reason, use the tools already available to digitize contracts. Scan them and place them with some of the available cloud storage providers. Create an EXCEL sheet with links to the files and all other relevant data. And then give access to the stakeholders that need it. While this is a very manual project, the results are great. And they may give you the support you need to spend some funds into the digitization of the other processes.

Most even mid-sized companies have some kind of ERP that covers receiving of goods and accounts receivables. If not, there are some very affordable options available. While they do not offer customizations, there is no upfront payment needed. All of them are cloud-based with various monthly or annual subscription plans.

Intentionally I have not put any names of providers. They are easy to find, and options are depending on the industry, budget, and complexity of the business.

Don’t think digital transformation is expensive. If done in the right way, it can have a positive impact on the business. Maybe return from one project can even finance the next one. Not doing anything is not a solution.

Below are a couple of links to articles that dig deeper into different aspects of the digital transformation journey.

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