Writing in Spend Matters, procurement aficionado Stefan Zorn notes that in today’s fast-paced global economy, businesses need to be able to respond swiftly to new market opportunities and competitive challenges that frequently emerge overnight. An outdated procurement machine compulsively fixated on risk avoidance and focused on unit costs rather than outcomes and quality is ill-suited to help them.
Here are his three recommendations for procurement transformation and bottom line cost reduction:
Build fuller integration with stakeholders
The old model of procurement was siloed, excluding internal customers who often viewed procurement staff as uninformed about the stakeholder’s expertise (e.g. law). Procurement staff must now work to be seen as enablers in a complementary field of expertise that stakeholders lack – strategic sourcing. Procurement staff can now access new technologies driven by AI and machine learning to strategically source new service partners, delivering new options to stakeholders. This brings new solutions to the table that stakeholders wouldn’t otherwise be able to access, boosting respect for procurement professionals and strengthening the procurement-stakeholder relationship.
Speed up Request for Proposal processes
Recent high-profile failures in supply chain have led more CFOs to impose stricter purchasing policies on procurement staff. The solution is to use tech platforms powered by AI fused with in-house industry expertise to massively streamline and speed up Request for Proposal (RFP) processes, matching businesses with outstanding service providers within days, not months as was previously the case.
Find the ‘hidden gems’
Large, global service suppliers have conventionally been trusted over smaller suppliers, partly because they’re better equipped to manage the needs of companies with complex risk requirements. But increasing numbers of major international businesses want to work with smaller firms because they’re more transparent to vet and are often more innovative and adept in their fields. Procurement professionals can deliver this by developing tech-enabled, fully-vetted knowledge of a select network of suppliers, all of whom must have less than 500 employees.
New technology can deliver all three, improving stakeholder-procurement relationships from top to bottom.
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.