Procurement Survival Guide: 4 Ways to Ensure Success

The role of the procurement organization is always evolving, and today it’s seen as more important than ever in helping to meet the strategic objectives of the wider enterprise.

Getty Images 926404324
Getty Images

The role of the procurement organization is always evolving, and today it’s seen as more important than ever in helping to meet the strategic objectives of the wider enterprise.

As you start thinking about the trends set to further transform your role in the coming year, now is the perfect time to begin putting some processes in place to ensure it’s a successful one.

With that in mind, here are four things you can focus on to get off to a great start.

1: Get ahead when it comes to managing volatility

We live in uncertain times. With a tumultuous global trade environment, not to mention the regular shifts in commodity prices and tariffs, managing market volatility will be more important than ever over the next twelve months.

For this reason, risk management needs to be at the top of your agenda. Here are some important actions you should take to make sure you get it right.

  • Get the basics right: The foundations of risk management start with the ability to monitor and track your key suppliers, which requires the right set of tools. These are the table stakes, but to truly set your organization up for success you also need to invest in the tools and processes that help you pre-empt changes and mitigate risk before it poses a real threat. 
  • Prepare for the worst: You can’t always see risk coming, so implementing the right processes and systems to manage adversity when it strikes is vital. Keeping a log of alternative mitigation actions to help you prepare for the unexpected is a great failsafe.
  • Monitor commodities: Continually monitoring commodity prices and implementing effective tools to help forecast them (and the resultant practical implications for category economics) will be vital in managing commodity-based volatility.
  • Position alternatives: Finally, it’s important to have a list of alternative suppliers and supply markets on hand, so you can recover quickly in the event of rising tariffs or unexpected regulatory changes.

2: Take the next step in your digital transformation

There are now more tools than ever to help procurement professionals gain insight into spend analytics, SRM, contract management, risk management and more.

Taking digital transformation seriously will be essential for procurement organizations in the coming year, especially as the wider enterprise is likely to be doing the same. Here are a few tips to help you get off on the right foot.

  • Audit the talent in your organization. Do your employees understand tech? Are they equipped to handle analytics and adjust to a more digital way of working?
  • Good, clean, quality data sits at the heart of every successful transformation. If you don’t currently have this – along with the processes and capabilities to quickly analyse and act on that data – now’s the time to put them in place.
  • Focus on tech for its value, and not for the tech itself. It’s easy to get drawn in by the latest offerings with all the bells and whistles, but first and foremost you should consider the fundamentals, like purpose, interoperability, a strong UX, and ease of use.
  • Assess which tasks you should automate first to make processes more efficient and agile. The most common examples are P2P and e-tendering tools, which can take a lot of time and effort out of fundamental procurement activities.

3: Focus on building deeper supplier relationships

Building strategic supplier relationships can have a huge impact on the performance of your supply chain.

The key to achieving this is segmenting your suppliers into tiers, clearly identifying the strategic partners who will play a pivotal role in driving business value. Once you’ve done this, you can implement a disciplined set of measures for each segment.

There are a number of ways of organizing and managing these tiers based on depth of coverage, level of automation, or even your supplier review criteria.

For strategic suppliers, you should use a wide variety of metrics to evaluate performance in terms of financials, operations, risk and innovation. For non-strategic suppliers you can use automated dashboards to flag those who may present problems.

Finally, surveying your suppliers and getting feedback on their view of your relationship will help to identify those who are integral to your supply chain – and allow you to improve relationships with those who currently aren’t.

4: Deliver value that goes above and beyond

With corporate strategies demanding more growth, faster innovation and greater competitiveness, procurement is increasingly being asked to demonstrate how it can contribute to wider business goals.

2020 could be the perfect time to show the full potential of your department and earn that coveted ‘seat at the table’.

Here are some ways your procurement organization can look at delivering more value:

  • Look for opportunities via the supply market to enhance revenue through alternative delivery models, new product ingredients, or innovative packaging techniques that appeal to evolving customer expectations.
  • Increase speed to market by tapping into unique supplier capabilities or looking at local market access for globally dispersed manufacturing and product distribution.

  • Play a proactive role in achieving sustainability goals by assessing the supply base to identify new processing or packaging options, or alternate ways to reduce carbon footprint across the supply chain.