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Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 4) — Supply Chain / Direct Procurement (Introduction)

10/13/2020 By

In the previous installment of this Spend Matters PRO series, we dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process). In this installment, we’ll turn our attention to supply management and direct procurement influence.

You might think direct procurement shouldn’t have any misalignment with the broader supply chain, given that direct procurement is itself part of the supply chain. However, supply management is not always in sync with supply chain management.

Organizations that get it right through better procurement and supply chain alignment enjoy higher supply performance. We conducted some research on this topic a few years ago and showed the difference in supply performance between firms with this top quartile influence/alignment capability below:

Figure 1: Organizations that have top quartile direct procurement influence on supply chain management outperform their peers on numerous supply performance criteria

We’ll highlight some of these top capabilities and some of the strategies and supporting digital solutions that can help enable them.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

This installment also has details about direct procurement vs. supply chain procurement, and we discuss some solution providers that can help.

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