Role of Technology in Strategic Procurement Transformation

ProcureCon is probably best known for its series of global procurement events that bring together Procurement, Purchasing, and Supply Chain experts from across industries and sectors. But it also compiles research in the form or articles, whitepapers and studies, like the presentation on The True Value Beyond Sourcing - Better Sourcing Design, delivered by sourcing optimisation experts Trade Extensions, or its own whitepaper on Procurement Challenges - how digitisation and the automation of procurement processes are changing the face of the industry, and how procurement strategies are being adapted to incorporate them.

On research, it has just launched its 2017 CPO Study, which explores the role of technology in strategic procurement transformation. Its findings are based on the results of opinions gathered through its on-site benchmarking survey, from the CPOs on its own membership database, and from interviews carried out with some CPOs after the survey data was compiled, discussing the benchmark results.

Themes covered include the role of procurement, the enabling developments in procurement technology, greater strategic visibility of CPOs, giving them more time to participate in building the roadmaps of their businesses, their partnership with other internal leaders, their role as consultants and value-driven strategies, among others.

The results, while garnered from a distinct region – at its ProcureCon Indirect West (US) 2016 event - are relevant to public sector and private sector procurement leaders alike. The following extract will resonate with most CPOs, we suspect:

“While there is consensus on the part of CPOs that some degree of procurement centralization is a boon to their key missions of creating value, realistically, categories that cannot be sourced globally, as well as some region-specific vendor relationships are typically allowed to be managed on a regional or local basis, according to predetermined guidelines developed by central procurement leadership. For these reasons, a center-led model is emerging as the preferred organizational structure for procurement within global organizations. In the midst of these structural changes, the role of the CPO itself is being imbued with the authority to influence the larger strategies of the businesses they serve. With increasingly detailed analytics providing insight on patterns of spending, streamlined tools for processing routine purchases, and invigorated relationships with other department heads, CPOs are entering a period where they are more influential than ever before.”

We don’t intend to reproduce the results here – they are clearly laid out in the report itself – but we can tell you that it is an easy-to-navigate and fairly speedy-to-read report, covering just a dozen or so pages of research findings, analysis and recommendations that will be useful for any CPO. It covers: the structure of the procurement department, communicating the value of procurement across the business and developing influence, exploring and developing different sourcing techniques, sourcing specialty categories and raising the standards of operations, identifying technology to meet procurement’s needs, and the potential of procurement automation. All statistical findings are backed up and explored by individual CPO commentary – which makes for a more interesting read and brings the subject to life!

We would recommend reading it, regardless of which sector your role falls into, as some findings are really quite wise, and others may trigger debate:

“Centralization of procurement may not mean scrutiny of purchases made across a global organization; rather, a Procurement Center of Excellence now serves as a strategic command center and provider of consultative value optimization, while recognizing that certain commodities cannot be effectively globalized.”

“Procurement is looking forward to greater levels of automation, Big Data utilization, and more internal client-friendly sourcing tools in order to transcend the tactical focus of their roles, fully dedicating themselves to strategy.”

“The strategic element of procurement is widely coming to focus on the concept of value creation. Within the role, a consultative relationship with other business leaders is the new gold standard, wherein procurement seeks to collaborate around sourcing by meeting teams half way, as opposed to taking a rigid stance aimed at simple cost reduction.”

The full report can be downloaded here, after a short registration.

And a quick (and early) plug for the ProcureCon Autumn European conference: Challenge Conventions. Provoke New Thinking. Solve Problems. 17 - 19 October, 2017, Berlin.

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