An Exciting Time for Procurement
Anyone who works in Procurement and Supply Chain will be aware of the level of change industries have been through in the past few years. The procurement function is no longer merely tactical but is becoming increasingly strategic. Technological advancements are continuously improving, data issues are still not resolved, and the turbulent events at the beginning of the decade have made the general public more aware of the functions, as well as how reliant and dependent companies are on their suppliers. All of these factors have made Procurement and Supply Chain an incredibly exciting place to be.
In this article, we will hear from several Procurement and Supply Chain experts to capture their thoughts on:
- Why now is an exciting time to be in Procurement
- The impact of digital transformation
- The opportunities with data
Why now is an exciting time to be in Procurement
Dr. Elouise Epstein, author of Trade Wars, Pandemics and Chaos and Partner at Kearney, holds an extremely positive outlook for Procurement. She says, “I often say that now is the greatest time to be in Procurement. It’s because technology has arrived and digital has arrived for Procurement – and it’s driving us along the path to the ‘strategic’ procurement that we’ve all been dreaming about for the last decade or two.”
Stephen Day, Chief Procurement Officer at Kantar, adds in a podcast interview that he believes it is also due to the foundational role that Procurement and Supply Chain plays in any business, a point which was especially brought to light during COVID.
James Meads, a Procurement Consultant, reiterated this in his podcast interview, as he claims recent high-profile events, such as COVID and blockage of the Suez Canal, “made the average Joe aware of what Procurement is and what we as a profession do. Supply chain risk usually comes from the fact that companies don’t really know what they’re spending and where. I say this a lot, but every company knows what they sell, while not very many companies truly understand what they buy.”
The digital transformation
Procurement has, over time, become more strategic, rather than remaining purely a tactical function. According to Charlotte de Brabandt, Representative of the Institute for Supply Management, we are just getting started with this change. “We are currently in a digital shift where we’re taking up new technologies, we are embracing new technologies in Procurement, to help us become a lot more strategic in the future,” she says.
Adam Brown, Procurement Strategy & Digital Transformation, AP Moller-Maersk Group, reminds us that the core of Procurement, as a function, remains finding, attracting and signing-on suppliers, but adds, “Who retains a supplier? Naturally, it should be Procurement as well, as they have already established that relationship, and hopefully the partnership with the supplier. Instead of passing them on to different departments, Procurement should manage the end-to-end journey by involving different departments – but by still overseeing the process. The supplier’s experience does not end once they have been signed on. It’s then that the real work begins, with onboarding, invoicing, dealing with purchase orders, payments, communications, and so on,” he explains.
Fundamentally, suppliers and buyers already have a solid relationship, but it needs to be nurtured. Both sides must ask themselves ‘Are we driving the needs of the business?’ and how to best reach a common goal.
Stephen Day explains, “The pandemic exposed the lack of digital enablement in Procurement, it has exposed a lot of businesses,” which is why he expects to see more focus on ESG goals such as diversity, inclusion and sustainability in future, rather than a single focus on cost-savings related KPIs.
A warning about data and an opportunity
Despite the technological advancements, data has, for years, been ranked as one of the top challenges by CPOs, according to Deloitte’s Global 2021 Chief Procurement Officer Survey. Although much has been done to try and solve this, the challenges remain.
Charlotte de Brabandt expresses her thoughts on the subject, “I’m so surprised with all of our advancement in our technologies that this seems to still be one of the areas where we must improve our supplier data management.”
Dr. Epstein has some words of warning on the topic. “We have, as a procurement function, skated by, ignoring data for too long, or just taking a very narrow sliver.” This is an area that, in her view, has to change. She continued, “If you get the seat at the table, you had better bring some value. How many procurement people, whether it’s the CPO or the actual people on the ground working with the business, show up to the meeting and add zero value? That’s a negative for all of us.”
Her advice: “You need to be able to get the data, be able to ask the questions in advance, and actually proactively work with it, because when it comes to the greatest challenges for procurement over the next decade – sustainability, diverse suppliers, innovation – solutions to these are not going to come from approving invoices or by making the buying process more difficult.”
To find out more about how Procurement is changing and becoming more involved in strategic corporate objectives than ever before, take a look at the Supplier Experience Survey, and our article on Supplier Relationship Management & Supplier Experience Management in Practice. These also explain how businesses are moving away from traditional Supplier Relationship Management to a holistic, supplier-centric approach based on Supplier Experience Management. Book a demo of our Supplier Experience Management platform to find out how SXM can transform your business.
This article is based on Chapter 4, An Exciting Time for Procurement, of our Preparing for Supplier Experience Management whitepaper.