As we kick off 2020, it is a great time for purchasing professionals to review their procurement strategies and tactics for the upcoming decade. By taking the time to examine your procurement process you will likely be able to identify areas where time, savings and/or efficiency improvements can be made.
No more crisis management, it’s time for disaster management
Procurement management is a dynamic function undergoing rapid change in response to many influencing factors, the most significant of which are cost pressure, global infrastructure concerns, sustainability efforts and market volatility. But it has been evident for Procurement to step ahead and showcase its contribution to maintain supply chain disruptions and manage force majeure events post any disastrous events.
Political and environmental forces can alter the business climate in a region in a very short time, leading to unforeseen gaps in supply chain. The ability for companies to manage disaster in a variety of regional markets and to adapt to the unexpected is a crucial and currently underdeveloped skill for most businesses. It is important to have a plan for disruptions in business due to external political or environmental consequences. An e-procurement solution organizes and simplifies vendor management with rotational bidding, pre-qualification, and other tools an organization can use as part of its supply chain disruption strategy.
Detailed information about supply chain efficiency is now easier to compile and analyze than ever before, thanks to the ‘Big Data’ revolution that is taking hold in organizations across all industry sectors. This ease of access to information that was previously difficult or impossible to collect is spurring decision-makers to make choices based on hard data, and the choices they make are fundamentally affecting operations at every step of supply chain.
Increasing downward cost pressure at nearly every step of supply chain has become the new normal in today’s globalized economy. While a buyer seeking out low prices is nothing new, the degree to which the modern customer demands cheap goods and services has evolved to encompass supply chain processes as well. Accordingly, companies operating in all industries are reviewing their indirect costs to identify areas where efficiency can be improved spend reduced.
Are you ready for RPA?
Source-to-Pay technology solutions have streamlined and automated many of the tactical activities involved in procurement. However, many activities that can best be described as “transactional” or even “swivel chair” remain, and jobs involving advanced analytics suffer from data gaps, system gaps, and resource gaps. Leveraging procurement bots is the next logical step as organizations look to benefit from advancements in digital capabilities. Like every transformative technology, the implementation of procurement bots, while exciting, is not without challenges.
Plans for the initial implementation of software bots are only the beginning. Robotic process automation is a constantly evolving area, with each generation of bots being able to take on an increasing variety of ever more sophisticated human tasks. Given that evolution, deploying bots is a good opportunity to evaluate the company’s long-term talent management program. As part of the change management plan, procurement officials should include proactive talent management strategies that address not only short-term workforce implications but also future talent needs. Organizations must proactively analyze their workforce and forecast for the type and number of workers needed in the future, as well as the skills they will require, and develop workforce plans to bridge critical talent gaps for both existing and new employees.
The implementation of bots in the procurement organization is an increasingly attractive option for CPOs to gain efficiencies and reduce costs within their procurement organization. However, bots will also fundamentally transform the way organizations work now and in the future.
Job profile of future Procurement workforce
Procurement officers must, by the nature of their work, exhibit competencies in a variety of fields normally considered mutually exclusive. Strategic thinking, accounting skills, and the ability to analyze risk are all part of the future procurement officer’s job description; as well, creativity, the ability to negotiate, and an understanding of receiving practices are also essential skills for a CPO.
Procurement leaders to leverage their experience into enterprise-wide policy initiatives, it was necessary for them to become an influencer throughout the various departments of their respective companies, not only within the purchasing department. Further, the need for supply chain specialists to embrace innovation as part of overall business objectives was crucial to fostering new ways of thinking about procurement.
Ultimately, the goal of the supply chain professional is to reduce the costs associated with procurement and to improve efficiency during the purchasing process. A focus on efficiency, innovation, and strategic thinking in purchasing is also evident in the choices that top-performing companies make when dedicating resources related to procurement. Among the most substantial differentiators between leader and laggard organizations in their respective procurement processes is a focus on metrics. Companies leading the way both in innovation and profitability place greater emphasis on the gathering of process data and related information to inform their decisions at a strategic level. This approach allows for the rapid development and delivery of actionable metrics that indicate exactly where efficiency improvements can be made.
Future Procurement leaders will be able to strategically support the enterprise’s growth and competitive objectives by enabling:
- design strategy and implement a robust operating model;
- get spend management under control;
- improve collaboration with and management of suppliers;
- institutionalize a third-party risk management program;
- create a robust talent management program;
- leverage the right technology for speed and effectiveness.