Proactis at eWorld – the next decade of procurement

In our overview of eworld, we said we would tell you more about the session on What Might the New Decade Have in Store for Procurement? from Charlotte Carter, Solutions Specialist at Proactis. Of course that was just before the western world started to feel the deepest effects of the current pandemic. But she made some solid observations which we think hold true as we emerge from this crisis:

She gave her take on what’s coming down line for procurement based on the projects she was working on and draws out four things that she believes will see some change:

Business partner approach – many procurement functions sit happily within another department, but must strive to get themselves better known and forge business relationships. They will do this by helping their customers achieve their goals, getting to know them, explaining their strategy to them. We have the tools to do that she says, and ultimately we will create closer relationships with Finance. The more we help others, the greater our impact within the business. When asked, very few people in the room indicated they had shared their procurement strategy with the business.

Digital and process automation – procurement has access to data and information from across the business and from all systems. They can see what impact the benefits upstream will have downstream, yet according to The Hackett Group only 32% of executives have implemented a digital procurement strategy. But many tasks can be digitised with minimal change to process, she says, with the hardest to automate being spend category strategy creation, vendor selection, vendor management and master data management. Some processes really should and will be done by automation, but those better left to the human will be negotiation and strategic thinking. What’s preventing more digital adoption? Budget, lack of tools, and maybe even trying to look too far ahead.

Data – better access to data will drive better strategy, to predict and to plan and therefore to model. Data comes from many places, and those will only grow. While there exists plenty of data, spend, transactional, sourcing cycles, lead times, etc, it is not yet integrated. We need a view across all business areas and procurement is placed to do that. What we need and will get is actionable data straightaway, rather than wait for it to be rolled up into a report. But as we are not all data analysts – that’s where AI will come more into play. It will show us the situation and what the most likely model will look like. This will lead to more compliance and less risk. In this new world of quick access data, IP and security will the big issues.

Collaboration – in all internal and external relationships collaboration will be key, but particularly for supplier collaboration as CSR becomes more and more important. To better understand and improve our approach to the supply chain we will need better visibility and insight into who it is we are dealing with. We will start to share ideas more and work together to achieve innovation.

One member of the audience pointed out that some of this is already happening – with predictive analytics for example. But the response was that while it might exist, the problem is that procurement doesn’t always have access to it. That is what needs to change.

While the previous decade has been very value-driven, with good practice leading to savings, Charlotte sees the next decade’s onus being on how we realise that value. And that, she believes, will come through data, collaboration and digital processes where appropriate, leading to:

  • Recognition at board level
  • Robust alignment with Finance
  • Strong collaboration with all departments – where Procurement is a strong strategic partner
  • Well managed suppliers and contracts – accountable for performance and minimal tail-end spend
  • Seamless automation and self-service processes across source to pay

The audience was asked how many of them believe their procurement function has a voice at the top table, only two out of the whole room indicated that they have. She wasn’t surprised, saying that Procurement still operates in a siloed way in many businesses. But she feels we will see a real shift in this over the next decade.

She aspires to the McKinsey wheel of value creation: value capture from onboarding suppliers for example, and better relationships, identifying and executing commercial demand levers to capture value; value enablement through designing and deploying a holistic best in class procurement model; value sustainment, making sure people have access to more information especially that lost in sourcing, through a structured supplier management programme and buying channels to help prevent leakage.

 

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