The Market Speaks: Procurement practitioner requirements and the tech vendor response — INVERTO

Spend Matters constantly updates its understanding of the state of the procurement tech market via RFIs for our SolutionMap dataset, vendor interviews, global event attendance and product demos with the aim of keeping tech-selection decision makers ahead of market trends. But we also endeavor to grow our understanding of the wants and needs of the customers using that tech – the practitioners.

In one series of interviews this summer and through to the end of the year, we are talking to vendors about what their customers really want from them and how they are proposing to address those needs. In a second one, we are talking to the end users about their expectations and requirements.

This week we spoke with Lina Tilley, Principal at INVERTO UK, a BCG company specializing in procurement and supply chain.

What are the challenges and asks of your customers?

Supply chain risks continue to be among the main topics of conversation with current and prospective clients, with security of supply very much still at the top of mind for procurement. The second challenge is dealing with inflation and tackling cost increases to protect profits.

Recent times have turned many things upside down, including the relationship between customers and suppliers. Increasingly, today’s buying companies have to work hard to be supplied on time, in full and at fair prices. This is accelerating the shift from a historically category-centric and more price focused approach to a more supplier-centric approach. Clients are looking to become ‘customers of choice’ to ensure that supply chains are secure and that they can benefit from special treatment both in terms of receiving volume on time and ensuring value for money.

Access to finance remains a challenge for many businesses, with mid and small-size suppliers often struggling to secure finance. This becomes a significant problem for customers that work with businesses of this scale as strategic sources. There are therefore important questions to be considered around how companies can help suppliers stay on their feet. Lessons can be drawn from companies that have embedded themselves within suppliers to be able to work closely together to address these challenges collaboratively.

Are you witnessing a shift in demand towards more ESG and supply chain risk capabilities?

We are still seeing that security of supply and cost often rank above ESG ambitions in light of recent geopolitical challenges, supply problems and inflationary pressures.

Our “Sustainable Procurement Study 2022” found that 60% of businesses already have a corporate sustainability strategy in place and 33% are in the process of implementing one. However, the study also revealed that 39% of businesses do not yet have a procurement sustainability strategy in place, or in progress. Considering the level of emissions that a company’s supply chain is responsible for, this lack of focus on a sustainable procurement strategy is likely to put their sustainability targets at risk.

That being said, the introduction of ESG legislation impacting supply chains is beginning to force businesses into action. In many countries, companies are already obliged to take environmental and social standards into account and to monitor compliance with them along their own supply chain. Following on from the German Supply Chain Act at the start of this year, the EU is planning to introduce even stricter legislation, requiring all large EU companies to conduct full ESG audits of their entire global supply chains, including indirect suppliers.

What is INVERTO doing to address these customer challenges?

We are helping clients to define what is strategic for their business and therefore who their strategic suppliers are. Once this is mapped out, it is possible to identify gaps in the maturity of their relationships with those suppliers and then design a roadmap to strengthen relationships with them to achieve a more strategic relationship with them.

However, addressing the basics will help all supplier relationships prosper – for example, in times of scarcity, accurate forecasts of what supplies the business needs and when will reinforce the ties between the customer and supplier and help the business to get what it needs. This precision facilitates the supplier’s own planning and therefore, if there are not enough supplies, suppliers will prioritize those clients with clear forecasts and binding agreements. Businesses should also consider fostering stronger relationships with key suppliers by signing longer contracts and working more closely together. Finally, by frequently seeking feedback on procurement processes and approaches and acting on this, the whole supply chain will be empowered to support their clients more proactively.

Many thanks to INVERTO. We’ll be talking to more vendors next week – check back in then.

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