1. Digitization is Your Friend
It’s not news to anyone that digitization is a roaring trend and I’m here to say: embrace it. With the digitization of the source-to-pay process being a key initiative for many chief procurement officers, to the inherent automation which promises to accelerate innovations such as artificial intelligence (AI), digitization is growing. Now, it can be deemed scary! Suspicion that digitization will eliminate jobs is not without cause—there is no doubt that certain roles are changing or being eliminated by automation. However, it is fundamental to empowering procurement success in the modern age.
Automation is focusing on risk management, driving innovation, improving cash and increasing revenue. Digitization is not your enemy; it’s your friend. By embracing it, you can become even more valuable to your organization.
2. Get Smart
Managing supply risk is not a new concept; however, with growing dependence on suppliers paired with more complex global supply chains, it comes with greater challenges. With the digital age comes a magnified lens via online news and social media—nothing strikes terror in a CEO’s heart like a scandal or supply shortage! A great way to tackle this is by having a solid understanding of existing and potential suppliers, including their supply chain.
This may seem like a daunting task but utilizing tools such as supplier risk and performance management solutions that can bring it together, generate insights and make them available at your fingertips, integrated action plans, flexible surveys and other capabilities which let you quickly gather information, will help you address deficiencies and ensure auditability of your actions. Be proactive about your suppliers!
3. Foundation, Foundation, Foundation
It’s easy to get caught up in new innovations like AI, but the success stories are lacking due to one major problem: foundation! In a recent Forrester study, they found the problem to be poor quality data.
Successful procurement leaders are operating smarter by leveraging analytics and technology such as integrated suites to generate clean data (at least if they have a unified data mode) and master data management solutions for addressing issues in back end systems, cleaning and normalizing suppliers’ records, for example. Digitization is your friend, but quality data is your foundation.
4. Believe in Darwin (change is a good thing)
Charles Darwin famously stated that “it is not the strongest or the most intelligent who will survive but those who can best manage change.” Markets are rapidly evolving with a continuous stream of new regulations, new technologies are disrupting traditional business models, and new risks such as cybersecurity are arising. It’s safe to say that the only certainty about the future is uncertainty.
Procurement helps companies adapt, meet new regulatory requirements and shift supply to optimize an evolving tariff landscape. Successful procurement leaders are ensuring their organizations are agile and can evolve, which means being flexible in processes. It also means ensuring technology supports rather than constraints your plans.
The shift towards cloud-based solutions offers many advantages to companies, but can also impose constraints, forcing companies to adjust processes to the software and tying their hands if their needs change. This is a key reason why so many companies switch providers—they realize too late that the technology doesn’t meet their ongoing needs. Be sure any technology you implement is likely to allow you to meet unforeseen needs. Change can be a good thing.
5. Boost Your Employees
If you want to be seen as a successful procurement leader, the winning ticket is helping employees do their jobs better. How do you do that? Start by making the purchasing experience a pleasure rather than a hassle. Of course, there may be constraints at times, such as buying off contracts or from preferred suppliers, but building agility into the procurement process will make it feel seamless to employees, who are guided to what they need and can easily track the status of orders.
The more procurement can be viewed as making employees happier and more efficient, the better for the function and your career. Choosing to put your employees’ needs ahead and automating the process will leave more time for strategic activities. Success!
6. Master Innovation
Suppliers are a vast pool of potential innovation. Success here can drive significant revenue opportunity and reduce costs, ultimately greatly increasing the stature of procurement in an organization. For example, procurement can collaborate with suppliers to develop new services to not only retain strategic customers, but grow market share while creating significant upsell opportunities.
The key to success here is making such collaboration scalable, through effective platforms that allow sharing of requirements and communication between internal stakeholders and suppliers.
7. Think Beyond Best-in-Class
Procurement teams are often obsessed with benchmarking against and achieving best-in-class performance on a range of metrics. This is all good, but the most effective procurement teams don’t aim for best-in-class as their end goal but an interim step. You don’t build a competitive advantage by being as good as your competition and doing everything the same. You also don’t attract and retaining talent by forcing them to operate in a fixed, generic best-in-class process. Winners empower their talent to bring their best ideas to life and do a few strategic things differently, better than the rest. A leading Telecom provider realized they had an untapped source of revenue in used handsets so configured their sourcing tool to run forward auctions, generating tens of millions in new revenue. Meritor, a leading automotive supplier, configured a unique New Product Introduction (NPI) process to dramatically accelerate launch of more profitable products, driving huge share price appreciation relative to peers. So if you rather win the World Cup than just play in the tournament, leverage technology that can both bring you to best-in-class quickly but still empower you to go beyond.
Alex Saric is chief marketing officer of Ivalua, a provider of spend management and procurement solutions.