Contributors: Siddharth Sharma, Utkarsh Verma, and Neha Goel
The world is a different place than it was a year ago. To meet changing consumer demand, manage shifting availability of raw materials and drive operating cost efficiencies, you need to recognize the critical role procurement plays. The procurement function is one lever in today’s extended supply chain ecosystem that can play a pivotal role in the post-COVID-19 recovery and to build resilience to prepare for future disruptions.
We’ve identified three ways organizations can tap into that well of potential:
Make procurement a strategic business partner and central to your organizational goals
The procurement function must evolve beyond its strictly transactional focus on purchasing to become a strategic business partner able to drive efficiencies for the organization. By doing so, procurement can improve your competitive advantage in the market by developing strategic supplier relationships, and improving agility and operational insights. This fundamental shift will require a reimagined operating model based on three key pillars.
First, transform procurement to a category management-focused function, centred around key spend areas and focused on driving business objectives such as better cost efficiencies and improved customer service.
Next, embed redesigned processes and performance measurement to create efficient operations:
- Operational procedures are the detailed process steps that support the category management lifecycle's four essential functions: source to pay process (including strategic sourcing approaches), supplier relationship management, contract management and category performance.
- Performance measures are metrics such as key performance indicators (KPIs) and service-level agreements (SLAs) against all operational procedures that define and measure achievement against business objectives.
And last, implement the necessary technology to enable success of future operations. The procurement function will need to evaluate its technology backbone to assess data accessibility and visibility to enable robust decision-making. Additionally, you should look to use a combination of emerging technologies and e-procurement solutions to achieve efficiencies in your source to pay processes.