A recent survey by Procurement Leaders found that 82% of procurement executives were currently undergoing a transformation.
This huge response may be partly driven by an awareness of the significance of the procurement function. What was once seen as purely a department of price negotiators, procurement is now recognised as a driver of innovation and a key defence against a host of risks.
The push for transformation in procurement may come from many quarters – indeed it’s often multiple departments that clamour for the same kind of digital innovation – because the benefits have wide-ranging impacts across organisations.
Having worked in the procurement industry for over 20 years, I have seen the good and bad when it comes to procurement transformation. In my experience, procurement professionals are more mature and advanced in the reality that technology alone will solve all of their problems. In order to successfully deliver a procurement transformation an organization needs to look at the operating model, people, process and technology together. This is itself is not new, what is becoming more apparent is even more of a focus on the change management or as we now call it “adoption” in order to ensure that chosen technology is being effectively used to deliver tangible results.
There are some significant benefits to both large and small companies in undergoing a “right sized” digital procurement:
Innovation starts in procurement
Innovation in product design, development and delivery can often be traced back down the supply chain. Procurement can enable innovation by identifying opportunities, partnering closely with colleagues and developing agile processes that allow the company to respond to changes in materials, resources and demand. Procurement can do so much more than negotiate prices – but it’s difficult to deliver these strategic benefits without a modern procurement solution underpinning their efforts.
Contract Control
Are your contracts organised, standardised, managed and easily retrievable? Or are they scattered across the organisation, stored in a handful of inboxes, loaded with unfavourable terms and unintended commitments?
Your contracts can be a risk, or an opportunity. Implementing a modern procurement solution means you have the tools to take control of your contracts and have complete visibility of your obligations and advantages
Risk Management
Lack of visibility creates risk. When you can see what you’re ordering, from whom, and when, you can understand the risks you’re exposed to.
“Years of outsourcing have also heightened the exposure of firms to risk. Any price shock or major disruption that occurs within distant marketplaces can now have magnified effects across the global value chain…”
Strategic resource management
Some of your resources are too important to leave to chance. A modern procurement solution can help you identify those strategically-important resources and make contingencies for any disruption to service.
Are your contracts organised, standardised, managed and easily retrievable? Or are they scattered across the organisation, stored in a handful of inboxes, loaded with unfavourable terms and unintended commitments?
Your contracts can be a risk, or an opportunity. Implementing a modern procurement solution means you have the tools to take control of your contracts and have complete visibility of your obligations and advantages
Corporate social responsibility (CSR)
Are you buying from accredited suppliers? Are your stocks free of dangerous chemicals? Do your suppliers support their communities, or damage them? Your customers are increasingly conscious of the wider societal impacts of their buying decisions – and so must you be.
Anti-bribery and corruption
Your procurement department could be on the front line when it comes to scammers and opportunists, who often approach those in control of budgets. The UK Bribery Act 2010 established company liability for acts of corruption committed by employees. So, it’s vital that procurement functions are aware of the risks and primed to blow the whistle on any bad actors – regardless of whether they are employees or external contacts.
Environmental policies
Commitments to reduce your carbon footprint or recycle more will flounder if they aren’t supported by procurement. To achieve green outputs, you must have green inputs.
Corporate reputation
Decisions made in procurement resonate throughout the company. If your procurement team buy cheap resources from disreputable companies, your brand will eventually reap the reputational cost of these decisions. Conversely, if procurement develop strong bonds with reputable suppliers, place orders for advanced products that are low on pollution and environmental impact, then your company will share in the positive publicity.
In the Cloud
Cloud based SAAS source to pay solutions can allow organizations to consume technology if you choose the right provider. The speed of delivering solutions in the cloud can reduce the time to value that organizations are looking for with their digital procurement transformation programmes.
Decisions made in procurement resonate throughout the company. If your procurement team buy cheap resources from disreputable companies, your brand will eventually reap the reputational cost of these decisions. Conversely, if procurement develop strong bonds with reputable suppliers, place orders for advanced products that are low on pollution and environmental impact, then your company will share in the positive publicity.
Where next?
Is your organisation preparing for a procurement transformation? Are you trying to work out an appropriate approach to build a vision and create urgency to realise these tangible benefits?
ExceleratedS2P help companies like yours to implement procurement and supply chain solutions. In addition to our platform expertise, we know how to harmonise your people and processes, so you achieve all the expected benefits of your investment.
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