Why now is the time to transform procurement

Over the past decade, while working at world-leading spend management and invoicing technology firms, I have seen the role of procurement transform. The need to increase supply chain sustainability, boost profitability and mitigate supplier risk in the wake of COVID-19 and rising geopolitical tensions has turned procurement from a cost-cutting department to a strategic arm of the business. Brexit has also presented a unique challenge for UK businesses, near and dear to my heart, as I’ve seen many have to rush to prepare supply chains and put together contingency plans before the New Year. In fact, recent research from Forrester found most procurement professionals believe colleagues consider them to be a key business partner, contributing significant strategic value (67%).

From my perspective, those businesses that have recognized procurement’s strategic value and given it a seat at the Board table have been better able to weather the recent turbulence. They’ve benefitted from greater visibility into the supply chain and better access to actionable insights to make better, faster decisions. This leaves those businesses well placed to gain an advantage over competitors. However, there are still many that have not given procurement the investment it needs to step up, causing them to lag behind savvier competitors. For them, now is the time to transform.

The rush to gain supply chain visibility

After so much supply chain uncertainty this year, and more likely to come, organizations need to focus on how to improve supply chain visibility and collaborate with suppliers. Time and time again, I’ve seen that each of these factors are vital for organizations looking to manage risk, reduce costs and give teams the tools they need to weather the storm.

However, as businesses move to ensure resilience in the immediate crisis, they can become side-tracked or make hasty decisions that destroy longer-term value. While protecting the bottom line in the short term is vital, organizations must resist the urge to revert procurement into a cost-management function and supplier relationships into cost-dominated ones. This is especially vital during a time when we are more dependent on suppliers that ever before. To achieve strategic objectives, organizations require a partnership mentality, allowing them to work with suppliers on managing risk, ensuring sustainability and collaborating on innovation.

Organizations must consider today’s and tomorrow’s requirements and challenges when selecting procurement platforms, looking at smart procurement technologies as agility becomes more important in today’s turbulent world. Unfortunately, I’ve often seen that this isn’t the case, and most procurement transformations fail – last year more research from Forrester found that 82% replaced or were considering replacing spend management technology as projects hit roadblocks and didn’t meet expectations.

Starting your procurement transformation journey

Having seen many successful transformations, and hearing of their past struggles, I’ve gleaned several lessons. First, an effective transformation journey can only begin once an organization has assessed its digital maturity and mapped out clear objectives for long-term transformation. Procurement teams must review their company strategy, structure, processes, technology and measurement against the leaders in their industry to gauge maturity and identify priorities for improvement. These could include improving data quality, enabling automation to free up employee capacity, or increasing efficiency by offering a wide range of capabilities to improve collaboration with suppliers and internal stakeholders.

Following this, it’s vital to balance long-term investment with near-term value to ensure current goals are achieved. This is where pre-packaged solutions can be a great start, helping you to deploy best-in-class procurement tools in a matter of weeks. However, businesses must ensure these solutions will meet their needs today and in the future, allowing them to differentiate from competitors.

Finally, businesses need to ensure that their procurement plan is backed by executives and stakeholders across the organization. Smart procurement technology will help to demonstrate near-term value through savings and increased efficiency, while also giving procurement teams the visibility they need to become trusted advisors for leadership, helping to identify new areas of innovation and spot risk in the supply chain ahead of time.

A long-term solution with no compromises

Once plans are in place, it is time to choose a solution that can underpin procurement transformation in the long term, giving plenty of flexibility while still achieving rapid time to value. At Ivalua, I’ve seen the company help businesses to do this by deploying pre-packaged Sourcing and Supplier Performance and Relationship Management (SPRM) solutions in less than four weeks. This is helping them gain immediate value and added visibility across the supply chain (even sub-tier suppliers), without sacrificing on flexibility or limiting procurement’s capabilities in the long run. Procure-to-Pay (P2P) solutions can also be launched in ten weeks, helping employees to manage cash flow efficiently and increase productivity.

The proof is in the numbers for me. A key reason I joined Ivalua is that, year after year, the company leads the market in retention despite having hundreds of the world’s most admired (and demanding) brands as its customers, keeping over 98% each year. Many of those struggled in the past with other providers. Ivalua has kept retention so high because it supports businesses at every stage of the journey, making sure to support quick wins, while setting the foundation to bring all spend and suppliers under management, and supporting industry-specific needs. In the UK, Ivalua has shown its mettle by supporting the complex processes that are found in today’s spend management landscape, particularly when it comes to direct materials. Our flexible solution empowers collaboration with suppliers on product design, launches and cost modelling throughout the product lifecycle and much more.

We offer pre-packaged industry solutions for manufacturing, financial services, public sector and more, including rapid deployment with tailored best practices so customers can truly manage all spend and suppliers, including strategically important categories. We’re helping organizations to recognize the strategic value of procurement, improving visibility, managing risks and cutting costs — all vital in helping to navigate this turbulent economic environment.

You can find out more about Ivalua here.

Ian Thompson is UK General Manager at Ivalua.