Cost reduction has traditionally been an important part of business operations when it comes to procurement. In the coming period, it may get an extra boost. After all, many organizations have had to invest heavily in the past year and a half to deal with the consequences of the corona crisis. Yet procurement is no longer just about cost efficiency. At least, that’s how Oracle sees things. The latest updates to Oracle Fusion Cloud Procurement announced by Oracle today also underscore this.
Procurement may not be the most interesting part of the (IT) environment of organizations, it is one of the most important. Not only in terms of finance, but also when you look at your organization’s supply chain. Procurement is a core component for both. Where traditionally procurement is mostly about cost, there is also an increasing focus on other issues. Think of the resilience of the supply chain, but also aspects around the environment and governance. Also in these areas procurement plays an increasingly important role.
In order to be able to respond to the shifting and especially the broadening interests within procurement, an organization must have software that can handle this. One of the SaaS services that you can currently purchase in the market is Oracle Fusion Cloud Procurement. As already indicated, Oracle is announcing the necessary updates for this today, as it does every quarter. For us, it’s kind of nice that nowadays they don’t do this once every two or three years like they did with the on-prem software. At least now there are not so many and we can also dig into the announcements a bit more.
More operational efficiency
A key common denominator of today’s announcements is that they make procurement more efficient. Not just in terms of cost, but also operationally. One example is Complex Procurement. This addresses the reality that the procurement process doesn’t stop when you’ve found the materials you need. This is followed by things like delivery of the materials and payment. Ideally, you should do all this within the same environment, where the same agreements apply. That’s what Complex Procurement offers according to Marco Rossi, Senior Director for Supply Chain Management Applications for EMEA at Oracle, who we spoke to briefly about the recent announcements.
Another part of Complex Procurement is that as an organization, you can now work more easily with your suppliers. Many of them need access to your systems. In the past this had to be done through a separate system, now they are part of your organization, as it were. Of course, you remain in control of what they can and cannot see. Issues such as IAM and security are handled by Oracle, which more or less follows logically as we are dealing with a cloud service here.
Get to know more about suppliers
Another update for Oracle Fusion Cloud Procurement is DataFox Supplier Intelligence. According to Rossi, this is a hugely important update. This new feature allows you to keep your supplier data up to date. You can think of DataFox as a kind of scraper or crawler that is constantly looking for the most recent supplier data. This is not just about things like contact information. You can also link sources that can say something about the general state of a supplier. For example, whether a company is involved in a lawsuit, or whether several c-level people are leaving within the span of a couple of weeks. DataFox Supplier Intelligence leverages the AI/ML capabilities of Oracle DataFox Data Management.
Another update is Supplier Qualification Management. This allows you to do an assessment of your suppliers. This is kind of an extension of what we talked about above. You can use it to do a risk analysis of your suppliers, but also to get a clear idea of what a supplier can actually deliver, for example. You can also include compliance with environmental regulations or your suppliers’ sustainability wishes.
A third overarching pillar in the announcements is gaining more insight. That’s basically part of the previous two as well. If you do everything in a single environment as is the case with Complex Procurement, you also keep more insight and overview. And if you have more and more accurate information about your suppliers, you’ll also keep a better eye on that. In addition to this, we also see Spend and Procurement Analytics and Spend Classification among the updates for Oracle Fusion Cloud Procurement. These are, as the names indicate, mainly about costs, and about gaining insight into that.
Spend and Procurement Analytics should allow you as an organization to centrally see the performance of procurement and suppliers. A single dashboard shows you the metrics you need to gain insight into this. Oracle promises that this also works without complex data integration. The latter is obviously a good thing, as that is often a problem. Spend Classification also provides the necessary automation in the area of collecting and organizing data around your expenses. Oracle uses machine learning for this. This should ensure that human errors in this area are reduced to a minimum.
In certain sectors, people do not so much need a cost-driven ERP solution, but rather want to work with ERP on a project basis. A good example of this is the manufacturing industry, such as shipbuilders. This type of organization uses many parts for a project (a ship, for example) and therefore also many suppliers. This is where the emphasis should be within ERP. With Project-Driven Supply Chain, Oracle adds an update to Oracle Fusion Cloud Procurement that should make this possible. The idea is that this will give you end-to-end insight and allow you to plan and execute work based on that insight.
Changing role procurement
When we ask Rossi to interpret today’s announcements in the broader context of the changing role of procurement within organizations, he places particular emphasis on the fact that you can now set up and drive many more things from a single environment. The emphasis with Oracle Fusion Cloud Procurement is, according to him, on offering a platform that is open and to which you can therefore connect all kinds of sources, including external (non-Oracle) sources. Risk analysis, for example of suppliers, is also a lot easier, he indicates. Finally, Oracle uses the Analytics Cloud to perform the necessary analyses. This also gives you many more possibilities in the field of risk analysis.
All in all, today’s announcements are yet another step for Oracle on the Fusion path that was started several years ago. That was not an easy decision, according to Rossi, to make the move from on-prem to Fusion, but one they had to make. According to him, they are now reaping the benefits of this switch. We will continue to follow it closely here on Techzine.
TIP: If you want to know more about Oracle’s overall cloud strategy, be sure to read our recent article covering it.