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Home » Blogs » Think Tank » Five Areas Where Procurement Officers Deliver Value

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SC Planning & Optimization / Sourcing/Procurement/SRM

Five Areas Where Procurement Officers Deliver Value

June 2, 2020
Keith Hausmann, SCB Contributor
Five Areas Where Procurement Officers Deliver Value

Procurement hasn’t always been seen as the ideal, agile strategic partner of the enterprise. Cumbersome sourcing processes, lengthy buy and contracting cycles, and gaps in domain expertise have resulted in a separation between procurement and the various business units it serves.

Those of us with many years of experience in procurement know there’s significant room for improvement across the entire process, especially in the realm of sourcing high-value, complex services. Although consumer technologies have leapt ahead and vastly changed all aspects of individual buying and consumption activities, enterprise sourcing and the technology it employs have noticeably lagged behind. Practically speaking, procurement process and technology haven’t changed materially in decades.

Now, with the added capability of advanced technologies, including artificial intelligence and machine learning, the dynamic is changing. These advances create a significant opportunity for chief purchasing officers and other procurement leaders to address the rapid pace and demands of a global business ecosystem.

Armed with the unprecedented insights that A.I. can deliver, procurement is equipped to become a true strategic partner to all lines of business, greatly improving service scoping, supplier identification and evaluation, purchasing, and ongoing management. Being a strategic partner means modifying organizational culture and practice, but transformational leaders who are doing this well are already delivering new and innovative sources of value for their companies, and being recognized by their peers as a result.

Procurement’s mandate has historically focused on ensuring governance, compliance, supply continuity, and cost reduction. Often, business stakeholders haven’t looked to procurement for strategic guidance because they haven’t felt that the functional knowledge and expertise were there to meet their goals and priorities. The time has come for this paradigm to shift. Procurement needs to engage with business stakeholders, not because it’s mandated, but because it will lead to more impactful results for the business.

Procurement can enhance every business function by ensuring that teams can easily and digitally define even their most complex needs, take them to market, and readily find, compare, negotiate, award, and contract with the best suppliers for their needs.

There are five defining moments in the sourcing journey where procurement can deliver greater value to its stakeholders, enhancing internal partnerships and ensuring that business functions achieve sustainable results.

Scope. The first defining moment is when a business stakeholder identifies a problem or opportunity that they want to address using a third-party supplier. Often in today’s environment, the process begins with an unclear definition of needs, or even a requirement defined by a supplier instead of the business stakeholder. This results in procurement and potential suppliers wasting significant time and cycles, delaying deployment of the critical service. Procurement can change this dynamic by leveraging the power of advanced technologies such as A.I. to guide stakeholders through the creation of their requirements in a faster, more accurate, and intuitive way. When the requirement captures all of the key needs upfront, everyone involved saves significant time and cycles, and avoids over-buying or rounds of change orders later.

Identification. Stakeholders need to quickly and efficiently identify suppliers that can deliver the services they require to achieve business priorities. To do this, procurement must be able to dynamically surface highly qualified suppliers for any given need at any given moment. They can’t wait for the traditional RFI/RFP process, search a large supplier database or vendor master, ask for referrals or recommendations, or rely solely on existing relationships to find the best supplier.

Comparison. Business stakeholders need an easy way to conduct a side-by-side qualitative comparison and financial analysis of the supplier proposals they receive. so they can quickly assess without bias which supplier is the best suited for their specific service need. The role of procurement should not be data normalization and spreadsheet analysis. It should be decision support and stakeholder coaching. We are entirely accustomed to this being done for us in the consumer world. and should expect no less in the enterprise world.

Selection. Significantly reducing the time from scoping through supplier selection, and enabling team members to engage throughout the process, provides greater transparency and efficiency. Given the breakneck pace of business in the digital economy, the traditional months-long process of vetting and qualifying suppliers before agreements are signed and the real work is begun is simply no longer viable. We have come to trust digital information to make critical personal consumption decisions, and this should be the standard in enterprise as well.

Touchless procure-to-pay. Every company has multiple partners, suppliers, and solutions that it works with to address specific business requirements, and the procurement function is no exception. It’s critical that CPOs select best-in-breed platforms and applications that seamlessly integrate with their backbone systems of record. With the right digital solutions in place, CPOs can ensure that the methods for achieving controls; compliance; budgetary approval; and invoice matching, approval, and payment are done in a completely automated way. There’s simply no role for highly capable, educated procurement professionals manually touching requisitions, purchase orders, invoices, or contracts. The outcome of any sourcing process, particularly complex services, should be a seamless and touchless robotic process automation-driven setup in the enterprise resource planning system of record, so that the experience for the business stakeholder and procurement continues to be simple, fast, and transparent.

Companies are rapidly adopting and employing technology to automate transactional work, providing procurement with the ideal opportunity. By leveraging the power of automation, transformational procurement leaders and their teams can be more strategic and impactful, delivering greater value to their business stakeholders and companies throughout the sourcing process. Procurement should focus on high-value activities, becoming trusted advisers to their stakeholders, aligning with business goals and priorities, and bringing innovative ideas and approaches to service sourcing.

We’re already seeing a dramatic shift in how procurement is viewed within many companies as more transformational leaders emerge. These procurement teams have a customer-centric mindset, and provide self-service platforms that give stakeholders a way to be more autonomous, while ensuring the appropriate level of governance and driving consistent processes and outcomes.

By astutely leading the digital reengineering of sourcing, procurement leaders are reinventing the profession, and raising its organizational stature as an indispensable business partner and catalyst for change across the company.

Keith Hausmann is chief revenue officer at Globality.

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