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Why now is the time to transform procurement

transformation

The need to increase supply chain sustainability, boost profitability and mitigate supplier risk in the wake of COVID-19 has turned procurement from a cost-cutting department to a strategic arm of the business. Recent research found most procurement professionals believe colleagues consider them to be a key business partner, contributing significant strategic value (67%).

Ian Thompson of Ivalua shares his perspective that those businesses that have recognized procurement’s strategic value and given it a voice at Board level 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, he believes that there are still many that have not given procurement the investment it needs to step up, causing them to lag behind. For them, now is the time to transform.

Commodity Price Management at BorgWarner [Plus+]

In a Supply Chain Management Review article I penned last year, I talked about some research I had done regarding the integration (or lack thereof) of input cost planning and forecasting to the business plan (including the impact on profit). The figure below shows that 39% of procurement organizations perceive that they do a decent job at mitigating price inflation, but less than a third have an integrated cross-functional process for doing so, and only a fourth of firms use centers of excellence, specialized analytics, and third-party services to help them anticipate future input costs.