We Believe in Procurement
Businesses today faces several major challenges such as managing cost & cash to stay competitive, managing suppliers ESG footprint and company Net Zero targets, digitalization of both business and the own procurement function, handling Supply Chain resilience and crisis management. All these challenges are areas where the Sourcing & Procurement organizations can pivot the game by strategy and execution. Read in our insights how this can be done!
Companies are facing more challenges today than ever and Procurement can be part of the strategy to handle these challenges. Procurement could play a center role in increasing competitiveness by e.g., mitigating cost increase, securing sustainability targets, enabling digitalization on company or functional level, and ensuring a flexible supply chain. When Procurement is Done Right, the Procurement Strategy is an integral part of and aligned with the overall business strategy.
As Procurement transforms beyond cost from a reactive to a proactive function it is vital to further develop Procurement skills within the organization. Procurement needs to excel at many different and new areas such as data science, change management and partnerships. Establishing an internal bespoke Procurement Academy in line with long term goals will be a corner stone in creating a Procurement Done Right function.
Procurement with Purpose
With the closeness and ownership of the supply base the Procurement function has a decisive role to play in shaping the company’s Environmental Social Governance (ESG) footprint and contribute to the Net Zero targets for greenhouse gas. Creating Procurement with Purpose is an important part of Procurement Done Right.
Dividing the Procurement organization into a strategic and operational part is very common. However, it is still common to find that the process interface between these two parts has not been considered to the extent it deserves, resulting in two separate processes and disconnected information flow between.
One of the most important Procurement capabilities is analytics, from spend analysis to savings tracking, it enables the Procurement function to create transparency that ensures value capture and avoid value leakage. Advanced analytics should provide Procurement Done Right professionals with actionable insight and foresight.
Future Proof Operating Model
As the maturity of the Procurement organization increases there is a clear move to a more centralized operating model to ensure economies of scale and skill. However, there is a risk that this model increases the distance to the actual business.
Digitalization creates two new opportunities for any Procurement function. First to step-up and support the corporate digitalization roadmap and taking clear ownership of supplier relation that support this transformation. Secondly it creates opportunity for the Procurement function to drive Procurement Digitalization that can be used as an enabler, to identify and create value, and to prevent value leakage. A Procurement Done Right function needs to embrace these two opportunities.
Cost Out – Value In
A Procurement Done Right functions of today needs to balance the instituted cost focus with possibilities to leverage the supplier base to add value. A Category Management approach is a proven methodology to use for cross-functional teams to address spend categories with the objective to optimize cost. A more collaborative approach with Supplier Relationship Management is a great way to balance the cost focus with possibilities to drive improvements and encourage innovation.