As a procurement professional, you make dozens of decisions every day concerning vendor selection, contractual terms, supply chain risk, technology implementation, and stakeholder management. You’re often forced to manage conflicting objectives and make important choices under pressure, while always being cautious to balance risk. With this in mind, here are 5 priorities procurement can’t ignore as they navigate the 'new normal'.
The primary goal for a procurement professional is to deliver value. They effectively lower operational costs by purchasing supplies and services at the best available price. To drive continued value in the digital age and build resilience against market disruptions, procurement needs to reimagine itself. This requires moving away from being a largely rigid, cost focussed and often siloed function toward a more flexible, collaborative, and lean capability.
Procurement professionals must focus on shaping the image of their function to maintain influence as priorities change during economic recovery. They should teach their team how to organize their proposals and sell them to business partners effectively, so they can show their value and not get brushed aside.
According to 2021 Global Chief Procurement Officer Survey from Deloitte, 78% of people rate operational efficiency as a top priority due to the fact they are always busy, juggling multiple projects and communicating across different departments.
The first step in accessing how efficient your procurement department is starts with looking at the bottlenecks in their processes and how can they be improved. When an organization has an effective procurement process, procurement can eliminate redundancies in the operation, promote collaboration and distinguish between good and underperforming suppliers.
Today’s bottlenecked supply chains are causing delays and shortages like we’ve never seen before and it’s harder than ever to find reliable suppliers. With complexity at an all-time high, procurement professionals must have the ability to make quick sourcing decisions to ensure continuity and resiliency.
There are several key factors that determine the selection of suppliers. Some of them are price or affordability, location, reliability and most importantly stability. The right suppliers provide the most appropriate products or/and services in order to meet business needs.
You have no doubt found that there are some suppliers you can always count on to get every order and shipment right, while others aren't quite so dependable. Even if your group of most reliable suppliers have long served you well, it's never a bad idea to find new options. Even if reliable suppliers are more expensive, it may make sense to split a company’s order between two suppliers. When the cheap supplier fails to deliver, the reliable supplier keeps the company in business.
Through sourcing the right suppliers, procurement professionals actively help reduce their company’s outgoing costs and operational risks.
With the aftershocks of COVID-19 still being felt throughout supply chains around the world, risk mitigation and contingency planning will remain a top focus for procurement professionals throughout 2022. For example, if you’re dependent on a few key suppliers, have you thought about what happens if they become compromised? Bottlenecks in the supply chain are ticking time bombs and procurement teams need to have a plan in place to act fast and mitigate any risks to their deals.
Deloitte found in their 2021 CPO Survey that 76% of respondents said digital transformation was a priority over the next 12 months, 20% more than the previous year. Now is the right time to reassess outdated technology.
By tightening up your procurement department with automation you can gain a competitive edge in today’s market and support ongoing objectives. Not only will you operate more effectively as a department, but you'll also manage contract renewals proactively, generate transparent and trustworthy data, and get full visibility of your deals. Procurement will also be able to keep a closer eye on the risks and responsibilities associated with the entire rebate management process.