With lots of things spoken about the enhanced role of overall supply chain and how supply chain can play a major role during and after the COVID crisis, a little attention is paid to a very integral part of this supply chain i.e., Procurement. Though procurement has gained considerable attention as an important support function to the business, in past decade, majority of the businesses do not think beyond cost savings when asked about their expectations from procurement. In this article, we shall try to understand how Procurement can become a major game-changer in the present time of growing uncertainty.
What is expected to change in the procurement in Post-COVID Era?
As the world is coming out of the COVID crisis, a paradigm shift is likely to take place in how procurement of goods and services will take place in coming future. In a bid to overcome the losses incurred in recent past and to gain momentum, businesses are expected to become more and more sensitive about their costs. A traditional approach of mere cost savings will not yield the required results and procurement will have to be equally focused on cost avoidance as well. Multiple new concepts that have emerged as an offshoot of the current Work From Home (WFH) culture are likely to become an integral part of the business in near future. This shall have a major impact on services procurement and the way we negotiate them. As the raw material is expected to become costlier, there will be an increased pressure on indirect procurement to become more cost-effective. It will be very interesting to see how we, as a procurement fraternity, respond to this changing environment.
What Procurement can do to overcome these challenges?
The first and foremost thing to be done is to come out of support function mindset and become a partner function. Procurement is required to become an end to end partner to the user functions, right from requirement generation to the end-use by the various stakeholders. This can only be possible if the procurement team starts taking interest in technical aspect and work with all the stakeholders.
Innovation is the key. Each and every requirement must be looked into as a project, no matter how small or big. This approach will ensure that we find the optimum procurement solution for any requirement. This equally applies to goods as well as services procurement. We must leverage all the available resources – utilize the technology, take inputs from peers in different industries and most importantly, learn from our suppliers. Procurement’s ability to craft innovative solutions will become a major differentiator in success of any business.
Procurement is always expected to be cost conscience and rightly so. However, the present situation demands a little more than mere cost savings. We are required to focus more on the value enhancement. As we are approaching towards an entirely different level of uncertainty in the businesses, value enhancement in each and every good or service we procure will reduce the cost of production and improve the bottom-line as well. Value enhancement can be a result of innovative procurement approach and increased supplier partnerships.
When we talk about the paradigm shift in how procurement will function in coming future, a very important aspect to draw your attention towards is the ability of procurement to become a profit centre and do not remain a cost centre. Traditionally procurement is considered to be a function which is managing the costs that are required to be incurred to run the business. Not subsiding this very basic functionality of procurement, we need to think a step ahead and try to see how we can contribute to the profit of the business. Traditional cost savings will help only to achieve the budget figures, while innovative procurement approaches as discussed above will give us an opportunity to contribute to the profit of the business. And this will surely be the game changer in coming times.
What skills do the procurement professionals need to acquire to achieve this?
As modern management gurus say, Procurement is an Art. To master this art, we need to become artists. Being a procurement professional for past one decade, I strongly believe that in order to strike an optimum procurement deal, in any business, one needs to be aware not only about the suppliers and market trends but also about the requirement and challenges of the internal stakeholders as well. So the first & foremost skill I would emphasize upon is, the listening skills. All procurement professionals have to be very good listeners. If we listen to the challenges of our stakeholders, both internal as well as external, we can surely identify the optimum procurement solution for each of our business needs, be it goods or services. At the same time, one needs to be equally curious and inquisitive, as this habit will take us to the depth of the issue and help us to dig out information which is not visible from the surface.
Today we are transacting in the era of data. There are many tools available which give us exhaustive data regarding market trends, supplier standings, and many other procurement-related information. We must develop a keen interest in analysing these data and utilize it to craft a suitable procurement solution. Data backed negotiation is already a well-accepted practice across industries. Analytical ability is something that differentiates an extraordinary procurement professional from an average one.
Traditionally, we are told to learn new things in order to grow in our professional careers. But, in today’s ever-changing VUCA world, we need to Learn Unlearn & Relearn with equal zeal and sincerity. Keep oneself continuously updated about changing trends and industry-wide best practices is the only key to ensure that we deliver the expectations from procurement in the highly dynamic and uncertain time to come.
Last but not the least, Collaboration is the need of the hour. Look for collaboration opportunities with external stakeholders (suppliers, industry peers, etc.) and you will get better commercial deals. Look for the collaboration with internal stakeholders and you will get solutions to some of the burning procurement problems. Modern management theories have shown us a way to succeed by way of collaboration, and this is very important when it comes to today’s procurement world.
Let us fasten our seatbelts and prepare ourselves for the coming future, which is surely uncertain, but at the same time full of opportunities to leave an everlasting mark as a procurement fraternity. Stay safe and stay connected!