Is your procurement function fit for purpose?

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Those having been working in or around Procurement for some time has seen the gradual transformation; the ‘best in class’ have moved from a cost reduction function to one that now has the potential to generate a sustainable competitive advantage.

Historically, driving cost savings, securing supply and managing often complex contracts has been the order of the day. Enlightened businesses has now begun to recognise the potential of the function to take advantage of a fast changing and complex environment.

A shifting landscape

We are all seeing the volatility and complexity in today’s value chains. Risk and opportunities are emerging to enable Procurement to raise its profile.  It can do this by leading the way and taking advantage of e.g. the rapid shift in automation, data analytics and IoT. Added to this we have new mobile applications and ERP technology advancement and the knowledge exchanges through closer external partnerships.

Procurement heads are repositioning and looking more closely at the use of interconnected supply chains, potential of new markets (e.g. Africa, SE Asia) away from the traditional ‘low cost’ locations and how to mitigate risk. This as the global markets they trade in become more volatile and unpredictable. Closer to home, the example of Brexit disruption highlights the need for Procurement to have the tools to hand to make sourcing decisions in light of the shifting political sands.

Data is key

Often competitive advantage comes from knowledge and in turn from useable data. The volumes of data available now are immense and business needs to invest in Procurement to disseminate and consolidate meaningful information for decision making. Procurement is, like sales, is outward looking and constantly collecting valuable data in the course of every touch point. Professionals needs to process this to be able to offer strategic support at the most senior level.

Automating transactional activity

Some estimates suggest that potentially 50% of a larger company’s  procurement activity could be automated. By utilising AI and machine learning an organisation can free up resource from transactional activities . In turn this allows a business to reinvest in more strategic procurement and therefore gain advantage in the market. Of course, this inevitably raises the question of the type of procurement talent needed within any team.

Sustainability in all its forms is now, rightly, high profile and here to stay. Again there is a massive opportunity for the Procurement team to lead the drive, not only meet the challenge ethically and morally but to take their business to the forefront as a brand leader in the field. No other function has the opportunity that Procurement has.

The procurement focus must change

As with many other functions, Procurement is feeling the effects of digital disruption. There is no shortage of articles that can highlight the way forward to adapt and succeed in this environment. Heads of Procurement professionals must be proactive in looking at how they can reframe the function and its place within the organisation to take advantage. Of course, much of the change needs to be driven across the whole business but Procurement has a chance to look at itself and to rethink what the function does now and will do in the future. This may need radical changes now to be fit for purpose, for example:

  • Investing in the appropriate infrastructure to support digital advancement
  • Leading the supply side data analytics that can drive key strategic decision
  • Seeking innovation via closer external partnerships
  • Being at the forefront of the sustainability profile
  • Investing in the new talent required to meet the challenges disruption will bring
  • Investing in strategic skills and developing cross functional flexibility

Is your procurement function fit for purpose? Is your business leading the way by adapting to the risks and opportunities of today’s environment?

Get in touch today if you are looking to invest in a permanent or interim procurement expert.