Procurement and the Dual Change Phenomenon
by Manish Shanbhag, EIPM
Business First. Rest follows!!
How does ‘Procurement’ contribute to this approach of ‘Business First’? How can procurement professionals become change-agents or catalysts to drive/support business first?
We look at the two elements that together play important roles to make this happen: Technology and People
With the exponential growth in Technology, more and more companies have revised their business targets to provide ‘greater Customer Value’ by increasing productivity – thus reducing costs, and providing added benefits. When we translate these targets to Procurement, the single most classical target of ‘Savings’ doesn’t suffice. With the aid of new technology and data-driven decision making, Procurement divisions have revised their targets to improve ‘efficiency’, have ‘advanced supplier interaction’, improve ‘cross-functional collaboration’ with R&D, Sales, Production and other internal departments.
While we talk about Technology and a Digital Transformation in procurement, a lot of the work of Procurement professionals is being done by machines with phenomenal accuracy. Right from predictive analysis and demand sensing to data crunching with Big Data, the algorithms that govern data manipulation have evolved over time to be as close as possible to accurately reflect real market dynamics. The new-look procurement professionals are thus using new digital tools in automatically optimizing inventory, reading early warning signals from suppliers, de-risking the supply chain beyond tier 1 suppliers, prequalifying suppliers in rapid time, automating price-benchmarking, etc.
While Procurement thus evolves as a Core function in businesses and is looked up to for innovative ideas, one of the key factors that CPOs have been focusing on is the Upskilling of the People who will be handling this change. What are the activities that the new-look Procurement function is upto?
- Procurement is taking up the role of an Internal consultant to help the business navigate through their own transformation.
- Procurement is acting as the pivot of the ‘Buying Centre’ managing all the Internal stakeholders.
- Procurement is helping business to understand how existing and new external capabilities can make a difference.
- With its proximity to the Supply side of Business (with maximum innovation capability), Procurement is quickly adapting to working with a diverse portfolio of Suppliers.
Effectively, there is a massive Upskilling of their core competences (beyond Negotiation) to match the pace of technological change. This approach also emphasizes the fact that Technology change and People change go hand in hand.
So, Invest in Technology !! Invest in People !!
In the coming years, the entities who embrace this dual change approach will have a significant advantage to provide ‘greater Customer Value’. Needless to say, Procurement will remain one of the Core partners and will be considered as the fore-runner in this tranformation, thus strongly supporting the ‘Business First’ approach.
