The Winds of Change: Procurement Gets Its Seat at the Top Table!

Ahima 1

(This post comes to us from Ashima Malik, Principal, Sourcing & Procurement Practice, Infosys. We can also credit Ashima with amazing drawing skills! And we will be hearing more from her in the weeks to come.)

Indeed, it will not be an exaggeration to say that we are living in exciting times as far as procurement avenues are concerned. It’s graduating from a tedious back-stage presence to a dashing front-screen persona. And mock-compliance scenes like above should be less commonplace as we go.

Consider this, Procurement is no longer regarded as a service-providing cost centre. Most procurement divisions are now being looked upon at as ‘value creators’ contributing to innovation and collaboration. In fact, this is more evident in the participation of procurement leadership on strategic initiatives. Very recently, a pharmaceutical giant was working through a major M&A and I was pleasantly surprised to see procurement at the centre stage and hand-in-glove with other units like Finance and Sales in assessing the organisational readiness and planning.

Going forward, I see the following key indicators pointing towards a shift in perception and hence expectations from Procurement:

  • Wider horizon for procurement, encompassing not just reactive side of source-to-pay, but also central in formulating strategy bringing transformational technology-based solutions.
  • Supreme focus on the relationship management; with more and more companies opting to focus on the core, the nature of relationships with suppliers and partners shall be virtual.
  • Key player in driving innovation and supplier-led initiatives impacting products, time-to-market, etc. Also, the supplier relationships shall transform from being prescriptive to more collaborative.
  • Accountable to make ‘Make vs Buy’ decisions. These decisions shall impact direct, indirect, product and services purchases. The whole Captive vs. BPO debate will intensify for shared services set up and Procurement will be at the centre of it.
  • Play a crucial watch dog for assessing and mitigating supply risks, in addition to contributing to the bottom line.Transference from cost and savings towards improving customer experience, risk coverage, research and intelligence-based category strategy.
  • Making crucial Technology investments in S2P. As per Gartner’s 2015’s Magic Quadrant report, in 82% of the cases Procurement is the lead decision maker to buy S2P suites followed by IT and Supply Chain.
  • Lead inter-linked operations with Finance, Market Research, Supplier Risk Management rather than functional silos. Companies are realising the obvious advantages of centralised homogenous processes across operating companies and locations. As one step ahead, in an interlinked model - the procurement is managing all the different pieces together for a multitude of efficiencies and benefits that include visibility, compliance and improved user experience.

So the journey has begun and there are opportunities at every step for Procurement to work consistently towards improving its perception as a value-adding trusted business partner.

Voices (3)

  1. Ashima Malik:

    Thanks for your comment. I agree, we still have quite a few laggards. However, like you said, Procurement is making headways. And I take pride in being a procurement practitioner in these times with the growing awareness about the function and its increasing alignment to strategic business avenues.

  2. Ashima Malik:

    Thanks for your comment Jyoti. I agree, we still have quite a few laggards. However, like you said, Procurement is making headways. And I take pride in being a procurement practitioner in these times with the growing awareness about the function and its increasing alignment to strategic business avenues.

  3. Jyoti Upadhyay:

    Great Article as always Ashima! I have experienced both extremes in the recent past While it’s really encouraging to work with companies that allow a center stage to procurement realizing the importance, it’s equally shocking to see few others who are so far behind in time that they still believe in paper based procurement documents and don’t have the budget to invest in simple technology like OCR.

    Procurement is however, the key decision maker for technology investments in majority organizations, as they are the ones who run sourcing projects for large investments and contribute a great deal in identifying a suitable service provider.

    Some additional areas where I have observed procurement playing a central role unlike before are, Master data strategy and Inventory management.

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