Is cost-saving the only significant responsibility of procurement professionals? This is where the leadership and the peers can underestimate the value procurement professionals can add to the organization or enterprise.
The role of procurement professionals has transformed. It’s not just limited to purchasing but ensuring seamless operations and an uninterrupted supply chain, researching markets, evaluating suppliers, and managing contracts, as well as mitigating potential risks. But there is more! With innovation and digital procurement transformation, procurement professionals can go beyond the traditional mindset to add more value.
Let us discover how.
It All Starts with Procurement Professionals Themselves
No doubt, the primary priority of procurement professionals remains the cost. This mandate is shared by the C-suite executives as well as their peers. However, this fact undervalues their contribution, especially when it comes to strategic discussions and decision-making.
Moreover, many experts agree that the next-generation procurement professionals need to ask tough questions on how they can contribute to strategic decisions. How they can steer the conversation more towards business and ownership and less towards only cost.
The solution lies in empowering them to do more and prioritize value creation. With that being said, C-suite executives expect contributions from procurement professionals in efficiency and automation, corporate social responsibility (CSR), supplier relationship management, innovation, risk, and measuring value.
Roadmap for Value Creation
Procurement professionals need to take necessary steps to align with the initiatives of their business peers and C-suite executives. Since value creation is more of a “team sport”, here is what is expected.
- Performance is critical in pushing executives or leadership to include procurement in the strategic team. That is why it is important for procurement professionals to deliver results across a wide range of business initiatives.
- Follow the management-by-walking-around strategy to your benefit as it is a great way to engage with the business. Invest time in understanding internal customer needs, requirements as well as perceptions. Responding to the needs of your peers will help bridge the alignment gaps and also give you the opportunity to truly showcase the value creation capability of procurement.
- Promote cross-functional training including job-switching activities. This will help you and your peers develop empathy for unique challenges different business units face.
Ways Procurement Professionals Can Add Value to the Enterprise
Here are key areas in which procurement professionals can create more value for business processes.
In the manufacturing sector where procurement occurs at a very large scale, transparency, negotiation, spend visibility, and vendor and contract management can become challenging. A streamlined procurement process can help you improve efficiency and curtail maverick spends. This will also ensure procuring goods at the optimal time and at an optimal price to maintain an optimum level of inventory. However, relying on legacy systems or paperwork won’t be enough.
Adopting scalable, affordable tools for digital transformation and automation of your procurement process can help you create additional value for the enterprise. E-procurement platforms such as Induzbuy can take away manual work and redundant purchases to save money, time and resources. This means you can gain complete control and visibility over the following processes to improve overall efficiency.
- The procure-to-pay (P2P) process
- Supply chain management
- Supplier relationship management & contract management
- Spend analysis
- Inventory management
- Financial reporting, auditing and forecasting
- Supplier diversity and sustainability
Before we dive into this discussion, here are a few questions to ponder.
- Do you give equal opportunities to small and medium-sized businesses when bidding for contracts?
- Do you identify with the benefits of a diverse supply chain?
- Is your supplier base innovative and flexible enough to represent the changing face of your company’s customers?
- Do you have a strategy in place for quality, cost, and equality to manage your reputation and avoid potential risks?
These questions are related to sustainability and supplier diversity, which is a key aspect of not only the procurement process but also the overall business. In fact, supplier diversity programmes can support the business in multiple ways. When you work with suppliers who are innovative, flexible, and efficient, they can add value to your supply chain and give you access to new markets. This can help businesses meet their CSR goals, thus, reducing potential risks and increasing sustainability.
- Alignment with customer demand
One of the major challenges of supply chain management is aligning with customer demand. That is why procurement professionals should develop a customer-centric mindset. They have to focus on what customers want and what the business wants the vendor to deliver. There is no denying the fact that there is a need for greater engagement and interaction between procurement professionals and their B2B customers.
Here’s what you need to consider in this aspect.
- Do you manage your customer relationships well?
- In your supply chain, at what point do you engage with customers?
- Do you consider your customers when measuring your performance?
Many experts believe that in the times to come, procurement professionals should make use of business intelligence and analytics to identify finer customer segments and support businesses to customize their deliverables accordingly.
- Risk management
Chief procurement officers (CPOs) need to reevaluate the risk and their risk mitigation strategy with changing markets. Globalisation and interdependencies in the supply chain have further increased the risk. However, the challenge remains in standardising how the risk is measured. Many procurement professionals agree that for this, third-party information and operational assessment data should be readily available and shared among the networks.
Moreover, with risks such as exploitation and fire incidents, procurement professionals and supply managers should look into third-party risk management and centralised governance. This also involves assigning tools and technology to monitor risk in different business segments and reporting on the entire supply base to identify risks within segments, processes, etc.
Here’s what procurement professionals need to consider when to be well prepared for potential risks.
- Can you identify supply chain disruptions beforehand and how well?
- How do you factor risk in contingency planning and decision-making?
- How do you plan to progress towards your long-term goals even during economic volatility?
- Leveraging the right data
High-quality supply chain data can give you the insights needed for growth and revenue generation, especially in complex supply chains which involve engineering, product development, packaging, delivery, sales, forecasting, etc.
Validated data that helps you develop a complete picture of risk exposure and supplier operations is essential for the decision-making process.
Procurement is evolving but also becoming more challenging. Procurement professionals not only have to align with internal stakeholders to achieve goals but also manage risk, drive innovation, and reduce costs! However, when it comes to adding value, they have to move beyond the traditional mindset of just saving costs and challenge the ways in which they can add value to the business including efficiency and automation, sustainability and diversity, risk management, innovation, a customer-centric mindset, and much more.
Induzbuy, a smart and affordable e-procurement solution can help procurement professionals transcend beyond their traditional responsibilities with greater efficiency and productivity. Automation of key activities involved in your procurement process can give you the much-needed time and resources to make strategic decisions and create value for your enterprise.
To know more about Induzbuy, get in touch with us today!