Powering procurement for the future of business

The business world is as vast and diverse as the products organizations need. But too often the processes available for purchasing these goods serve as obstacles more than opportunities—disjointed and opaque, manually driven, often built on inadequate systems, and short on usable data, even in an age of digital transformation.

“Traditionally, procurement processes haven’t been able to optimize performance for the organization,” says Jennifer Brown, principal, supply management and digital procurement leader at Deloitte, and an expert on supply chains and procurement. “You’ll see operations really challenged by minor changes to the way that they’re doing business.”

Procurement as a mechanism for innovation inside the enterprise seems unlikely. Worse, those inefficiencies and limitations make purchasing—a function touching critical aspects of an organization’s strategic and financial plans—both time-consuming and non-strategic, as purchasing managers end up making just-in-time decisions or ones based on inadequate data about business priorities.

As Petra Schindler-Carter, director and GM at Amazon Business, notes, poor procurement practices rob businesses of the chance to use buying “as a strategic opportunity, an incremental value driver or an opportunity for transformation,” she says. “Companies taking a different mindset are saying there’s got to be a better way.”

In a rapidly digitizing world, e-commerce opens new avenues for businesses to address their purchasing needs. Truly transforming the procurement process, however, requires a frictionless experience capable of uniting buyers with sellers best suited to meet strategic sourcing needs. It also requires data that helps companies increase visibility into their spending, anticipate needs and match purchasing choices with larger strategic and cultural goals.

“Let’s say I’m a small business or small elementary school. I don’t have space to store whatever my traditional bulk supplier may want me to have on site. Our replenishment software and algorithms are probably doing a better mathematical job at predicting what those replenishment volumes should be, and make the day-to-day life of our customers easier,” Schindler-Carter says. “In contrast, a multinational Fortune 50 company needs suppliers that can reliably service and handle the procurement of thousands of products in short order.”

By applying the familiar consumer buying experience to a business-to-business context, Amazon Business connects a full range of buyers and sellers, while applying guardrails to help organizations control spending and increase transparency in reporting as well as the ability to integrate into existing e-procurement systems.

Inside that business-centric framework and customer-centric approach is a massive network linking sellers of all sizes across multiple categories to buyers of every kind. That diversity and scale are attractive to any enterprise. Intel, for example, has leaned heavily into e-commerce and appreciates the impact a robust community of sellers can have on pricing and access, helping potential customers find and purchase its products more effectively.

It’s a natural evolution for the company—with a long list of benefits.

“There’s time, there’s convenience, there’s removing friction,” says Phil Vokins, cloud services director, Canada, at Intel Corporation. “And with the right information going to the customer, it means better decisions for their business.” He believes leveraging the trust Amazon has built in the consumer space only enhances the opportunities available to the company through Amazon Business, a division of Amazon serving businesses and organizations. “We welcome it, we think the customers welcome it, and we’re thankful for yet another opportunity to bring our leading-edge tech to market.”

The visibility Amazon Business provides is invaluable.

“I can’t count how many products have Intel stuff inside. More than thousands, if not hundreds of thousands of products, from computers to servers and all the peripherals and network, memory, and storage that the manufacturers bring to market,” Vokins says. “Somebody who can reliably bring as much of that breadth as possible to market can only be good for Intel, and I’d also argue, can only be good for the customer, too.”

As a mechanism for innovation, large-scale e-commerce works in two ways. First, by removing friction, it helps guide purchasing in ways that align with the needs of the enterprise. And, in exposing a wider range of options, it returns to those responsible for procurement what might be the most valuable asset an enterprise has: time. “When you can free up people from mundane tasks, they’re free to work on value-added tasks,” says Moz Thomas, director, Business Prime at Amazon Business. Like the consumer version of Amazon Prime, Business Prime provides free shipping options—but with the addition of enterprise-friendly features such as tools to track spending and build company-specific purchasing policies that guide buying.

For companies with wide-ranging needs, those feature sets, combined with the scale of the selection available, can help avoid disruption in supply.

Schindler-Carter describes the experience of a large, multinational energy company. “Historically, it was approached by suppliers that required traditional fill rate contracts, assuming it was monolithic. But the energy company wasn’t. In fact, it was incredibly diverse, with needs ranging from products for a drilling platform to toys for their daycare system,” she says. “It was really hard to manage all of that data and forecast what the company needed.”

Using historical sourcing data built from Amazon Business Analytics, the energy company was able to build insights and learnings into purchasing trends helping forecast future needs more accurately. The result was greater efficiency in procurement processes and lower costs, Schindler-Carter says.

The role of data as a force for innovation is significant. Effectively managing the purchasing process requires “analytics and the ability to have those insights and be able to rely on cognitive and AI,” Deloitte’s Brown says; “being able to extract data quickly to be able to make real-time decisions or even predicted decisions.”

That can mean information on purchasing trends, historical sourcing and predictive calculations that detect patterns and allow for a more streamlined procurement process, says Anne Rung, formerly administrator, Office of Federal Procurement Policy during the Obama administration, and now director, public sector, at Amazon Business. With Amazon Business, those capabilities are built on Amazon’s strength in AI and machine learning.

Even so, the appetite for information is hard to satisfy. “Using machine learning and AI—we cannot give our customers enough data capabilities. For public sector customers, data is the key to managing their spending and ensuring accountability and transparency to taxpayers,” Rung says.

For a company like Intel, which relies on external sellers to bring its products to market, that transparency is key. Conveying detailed product information through Amazon Business, the company is able to demonstrate in clear terms what its products do, and why Intel is a leader in its field. “It’s vital that the latest product that we are bringing out is seen as something by the customer that they want to buy, that they want to invest in, and they understand the reasons why they should do so,” Vokins says.

A well-constructed e-commerce purchasing solution means the opportunity to understand everyone buying and selling Intel products. “Not all of our customers have dedicated procurement people. In fact, often only the larger customers do,” Vokins says. “We have to put ourselves in their shoes so that we can understand what they need and deliver the best experience.”