Things are changing rapidly in the world of procurement. According to a recent Zycus report, “Procurement Experts Outlook 2018”, businesses are “more than ever exposed to a myriad of complex issues revolving around cost savings, operational efficiency and obtaining a competitive edge through available data and human resources.”
The report, features articles from industry thought leaders on this question: What is the role of procurement in 2018? Here are some excerpts from the report:
Afzal Nasser, vice president, Global Procurement for Belden Inc. stresses the importance of technology: “To stay relevant and remain competitive, businesses need to change with Imagehe times – shifting from manual management of upstream/downstream procurement activities to more automated, technological solutions that give greater visibility and help us drive productivity.” Needed are procurement teams that think creatively to proactively manage the supplier network and nurture the relationships with business partners.
Tim Cummins, CEO of IACCM, says that it is becoming “increasingly evident” that many of today’s procurement jobs will disappear. “For those that remain, .”
Cummins notes “Organizational performance increasingly depends on the development of sustainable and differentiated supply networks, demanding sophisticated market analysis and collaborative supplier relationships. The success of procurement “will be measured on outcomes, in particular its contribution to:
- Integrity and reputation
- Competitive difference”
Bill Michels, Vice President of Operations, Americas, The Chartered Institute of Procurement & Supply, says it is key for Chief Procurement Officers to focus on building and sustaining “high performing” teams. “Recruiting the right talent, developing both the capability and competence are a good start. The team must
also be capable of delivering cost improvement, value, innovation, revenue opportunities and manage risk to being recognized as a top quartile company.”
Jon Hansen, Editor and Lead Writer, Procurement Insights, notes: “It doesn’t help, when senior management confines the performance motivators as I call them to a narrowly defined scope of functions that are meant to drive static metrics such as cost avoidance or best value purchasing. What this disconnect means is that procurement professionals have to be willing to step up and take risks regarding the introduction of new and innovative ways to deliver strategic value that is commensurate with how the market – and more specifically, client needs are evolving.” He says Becoming relational means that you move from an adversarial to collaborative interaction with suppliers viewing them as partners as opposed to only sources of either products or services.”
Paul Stasko, Director Supply Chain Management, Curtiss-Wright Corporation, writes, “Outsourcing alone is no longer enough. We need to create strategies around our sourcing to optimize it. Spend analytics is the window into strategic sourcing. Spend analytics starts with creating a ‘spend cube.’ A spend cube a multi-dimensional database that includes the spend category, supplier, business units/location and how much was spent.”
Robert Walker, Manager, Business Systems, Qualcomm, focuses on savings. “One responsibility all teams will address in 2018 is savings. Savings is only one piece of the value Procurement provides; however, it is often used to measure success. A savings definition often differs by organization as well as departments within an organization. Achieving success with savings is more than reporting a number.” True success with savings in 2018 “is achieved when you report savings backed by Procurement, Finance and your internal stakeholder. A successful savings program can be achieved in 2018 by completing three important milestones: defining success, aligning your progress with stakeholders and providing unified reporting.”
Robert Handfield, Distinguished Professor of Supply Chain Management, North Carolina State University, stresses the importance of gathering and using “real time” supply chain data. He says, “The emergence of real-time information that enables the instantaneous visibility of assets across multiple tiers in supply chains has only been realized in the last two years. Real-time data is enabled by the emergence of cloud computing and mobile devices, which creates ‘big data’ technology platforms that process higher volumes of internal and external data from multiple sources.”
Kelly Barner, Managing Director, Buyers Meeting Point and Director of Intelligence, Palambridge, notes that as procurement becomes increasingly strategic, “our purview has moved from the realm of purchasing oversight into full supply chain management. In most cases, we have already driven out the majority of the costs and inefficiencies associated with our direct (or first tier) suppliers. This means than in order to continue creating value – not to mention driving sustainability, risk management, and top line growth – .” Direct access to second tier suppliers is needed and for that to happen “we need to change the nature of the collaboration and information exchange with our first-tier suppliers. Fortunately, today’s business climate is warm to the formation of expanded supply partnerships.”
Some common themes? Better collaboration; relational, rather than transactional relationships; creating value; real-time use of technology and data and bringing procurement insights into the strategic mix.
Thanks to these visionaries for sharing their insight! And for Zycus for pulling together the report.
Image: Analyzing Financial Data by Dave Dugdale via Flickr CC