At ProcureCon’s Indirect Procurement conference, I closed my remarks by suggesting a number of areas that purchasing, finance, and supply chain organizations should pay close attention to in the coming quarters. These include the following areas:
- The Economy in 2014 and beyond. Our internal forecast calls for a mild downturn lasting as many as 4 quarters starting in the next 24 months, likely sometime during 2014 (other forecasters, it should be noted, include William Strauss from the Chicago Federal Reserve Bank, are not as bearish as we are). Indirect procurement represents a large opportunity not only to drive savings but influence demand and reduce working capital requirements in the event of a downturn.
- Ownership of risk management – finance, procurement, operations, IT/vendor management, who? All? Some? The ownership of risk management for indirect and services procurement is an area which few organizations have effectively defined. Whether risk management rests within procurement or somewhere else in the organization (e.g., finance), it is essential to define the right processes to address risk not only post-contracting but also across sourcing, supplier management and transactional purchasing processes.
- Using Supplier management platforms. These efforts should center on tying initiatives together to create unified supplier views through common systems (beyond spend analysis alone).
- Staying on top of all purchase-to-pay, A/P and related strategies for supplier on-boarding and enablement. If we don’t have visibility into accurate supplier data, it is all but impossible to get the most from working with vendors.
- Fully considering the potential of the financial supply chain (not just the physical one) to impact indirect procurement performance. See recent posts in this area here and here.
- Leveraging intelligence-centric resources and assets in the business and supply chain. This requires building visibility into supply markets and suppliers that goes far beyond the periodic PPTs you might receive from internal or external researchers updating quarterly or annual market intelligence reports. Such intelligence should increasingly be embedded in category management, strategic sourcing, and transactional buying efforts.
For deeper analysis into related topics, download these free research papers: