The Work-Bench Snapshot Series explores a particular topic we’re digging into from an investment standpoint.

We did a deep dive into the procurement space back in 2019, when there had already been years of discussions over the need for tooling to support digitization in the function.

Yet a recent McKinsey report indicates that the market adoption of procurement software has been slow: “many [companies were] trapped in pilot purgatory, making small investments in select use cases that never scale[d] up to achieve real business impact.”

Fast forward to today, COVID-19 has exposed new pressures and strains on the procurement industry — supply chains broke down (literally), normal paper processes and in-person workflows were disrupted, and cash flow and access to resources became unpredictable.

Complexities within and between systems, operations, and organizations for procurement became highly apparent, and the demand for digitization can no longer be set aside.

Top Challenges

As a result of these tailwinds, there is increased focus from procurement leaders to improve on the following areas:

1. Managing costs: Given the immense cost pressures during the pandemic, cost management is the greatest priority for CPOs right now, with approximately 8x more day-to-day focus than other areas. The inability of companies to adjust cost structures, while continuing to meet demand during the pandemic was a top-cited challenge.
2. Gaining visibility into supply chain networks: 90% of organizations rated their visibility into their extended supply networks as moderate to very low. Meaning, most supply chain managers might not know where inventory and all their components and parts are at a particular time, from manufacturer to final destination.
3. Reducing overreliance on suppliers: More volatility also means a desire to de-risk one’s supply chain to make it less vulnerable to disruption. A majority of organizations are seeking to increase their supplier numbers, potentially to reduce this overreliance. At the same time, they’re looking to locate suppliers in closer proximity to their operations, which is likely to help reduce pandemic and global trade related vulnerabilities, and to best ensure continuity.
4. Moving off of manual spreadsheets & automating workflows: 40% of companies are still utilizing manual spreadsheets or offline modeling in their planning. To combat this, improving and automating procurement processes (68%) and extending digital procurement tools to internal and external stakeholders (59%) are the top-digitization strategies for CPOs.
5. Better utilization of data sources for spend insights & demand planning: To address margin pressures amidst increased volatility, spend analytics can provide a rich source of new insights and opportunities, as well as better support demand planning when faced with rapid market shifts (i.e. aggregating and understanding shipping data, weather, and economic indicators).
6. Better utilization of risk intelligence: Procurement leaders see opportunities to better manage supply chain risk and supplier relationships. The current manual and clunky supply chain processes adds a layer of unnecessary complexity when dealing with vendors, and because of that, CPOs are exposed to added and often unnecessary risk.

Existing & New Players

One of the most comprehensive landscapes we found in the space came from The Procurement Technology Landscape Report, below.

The landscape above is representative, but not exhaustive. Another comprehensive Procurement Technology market map can be found here.

While it may seem like a crowded space, we still believe there is more opportunity for new entrants to pick up meaningful adopters and customers. To call out a few notable venture-backed startups:

Strategic Sourcing

• Fairmarkit (last raised $30M Series B led by GGV): intelligent sourcing platform
• Sourceday (last raised $12M Series B led by Baird Capital): supply chain collaboration
• Anvyl (last raised $9.3M Series A led by Redpoint): supply chain relationship management

Supplier Management

• Scoutbee (last raised $60M Series B led by Atomico): supplier discovery
• Tealbook (last raised $14.4M Series A led by RTP Global): vendor master data

Spend Intelligence

• Suplari (last raised $10.3M Series A led by Shasta Ventures): spend intelligence

Demand Planning

• Unioncrate (last raised $9M Series A led by Gradient): demand planning platform

Risk Intelligence

• VISO Trust* (last raised $3M Seed): a vendor security risk assessment platform

If you’re a procurement leader or operator who would like to swap notes, or if you’re an enterprise software startup founder building in this space, we’d love to connect to hear your thoughts on what it will take to move beyond “pilot purgatory” to mass adoption and acceleration of procurement software at the enterprise level.

*Work-Bench portfolio company‍