The past 18 months have been a wake-up call to the procurement function, and while nobody knows what lies ahead, there are fundamental changes that high-performing procurement teams are making to thrive in 2022. According to a recent Workday study, virtually all executives (95%) have reported some pandemic-related disruption to their company’s strategic sourcing and supplier management processes. In fact, 60% of companies are now accelerating plans to update and automate their sourcing and procurement processes.
To come out ahead in a post-pandemic era of strategic sourcing, leading companies will look to tech-enabled collaboration, visibility and risk management to integrate strategic sourcing functions and minimize disconnects across the board. Here’s how:
Look to agile procurement function as the operational bedrock for cost savings
The pandemic demonstrated the importance of a seamless source-to-pay process to support swift and agile operations. And, more change is ahead. According to a Deloitte CFO survey, within the next three years, more than two-thirds of CFOs (69%) indicated an increase in the diversification of their supply chain sources and 23% expect greater vertical integration within the next three years, along with decreases and increases in sourcing by region. They also expect sourcing to increase primarily in North America and Asia (other than China), and to a lesser extent in other regions.
But, most companies still have a long way to go to drive the operational efficiency and agility they need to pull ahead of their competitors. In fact, in a Harvard Business Review survey, 92% of global executives described the digital maturity of their current supplier management processes as less than best-in-class, with one in eight still limited to legacy technologies such as email and simple office tools.
This ineffective process leaves procurement teams spending hours piecing together fragmented information — a task that technology could easily automate. By updating legacy tools, businesses can not only become more agile, but also be able to manage more spend and grow more impactful relationships with strategic suppliers.
Drive usability and transparency within the supplier ecosystem
Over the past 18 months in particular, supplier relationship management and full visibility has been top of mind, and that starts with focusing on integrating all systems to support a unified supplier master. However, as it currently stands, according to the same Harvard Business Review survey, most executives say their company lacks visibility into the risk, compliance and performance of individual suppliers, with 28% describing their capability in this area as weak. The first step to gaining this transparency lies in implementing innovative technologies to drive end-to-end visibility and ensure that information is consolidated between all business functions.
There are challenges to achieving visibility because all data procurement teams should have access to is dispersed across the business.
For example, supplier information is often stored in emails with the business stakeholder, such as a marketing agency’s business information that might live in a marketing manager's inbox, or contracts that are in a folder with the legal team. Procurement would have no idea if or when they auto-renew, leaving the business at risk of paying for a service it's not even using. By having all information housed in cloud-based systems, companies can ensure that real-time updates are encapsulated, and that collaboration isn’t sacrificed for the sake of agility. The end goal -- driving automation and bringing data together for analysis, whether for the strategic sourcing team or for unifying across procurement, inventory and supply chain.
Elevate sourcing and procurement to unlock unprecedented business innovation
Enterprises are seeking greater collaboration, organizational agility and automation in sourcing and procurement and are turning to cloud technologies that can provide end-to-end visibility into sourcing projects, while simultaneously allowing internal and external stakeholders to work together in real time.
At the end of the day, sourcing and procurement teams that are empowered with intuitive, automated technology will be better positioned to proactively align with the business earlier in the spend cycle, and in turn, can make data-driven decisions that effectively assess and mitigate business risk.
The pandemic has exposed the procurement function as a key foundation for long-term business continuity and success. Companies that will come out ahead understand that a powerful, agile procurement function can be the operational bedrock for creating cost savings, driving visibility and supporting ever-evolving business priorities.