More complex and ruled by legal, ethical, regulatory and sustainability issues, procurement needs more agility, strategy and technology
For years, the main concern of any procurement sector was to reduce procurement costs and ensure the delivery of goods and services per correct timelines and specifications. Although these responsibilities haven’t left the scene, the current procurement scenario is different. Now more complex and ruled by legal, ethical, regulatory and sustainability issues, procurement needs more agility, strategy and technology, in order to contribute in changing the dynamics of your supply chain with innovative business opportunities.
Only professionals in such field have the power to change the current logic of old processes. To shake up their sectors, they must become part of something bigger in businesses. They must act as advocates for their brands, leading the way of daily practices and developing actions focused on innovation and sustainability. To help their companies to take a step toward the future, procurement professionals must rely on the following requirements:
Cost reduction is still a concern for businesses around the world. However, this approach can be achieved only by identifying the source of these costs, in order to better redirect them. With increasingly controlled transactions through e-procurement, companies now manage to accelerate other business-critical phases – such as market analysis, proposal evaluation, negotiation, contracting, billing, payment and supply management –, which generate global savings for the company. In addition, we must keep in mind that any savings are important, because they are absolute in procurement – that is, each penny saved is an additional penny in profit.
The standardization of purchases according to internal demands is a need of any professional in the area. For such purpose, it’s worth optimizing your processes with the use of technology. With all essential information gathered in a single-tool workflow, which can be standardized according to internal demands, electronic contracting allows users to make purchases from previously negotiated contracts; this yields them a productivity increase around 15% to 20%.
Another way to save time is by tracking the progress of on-line quotations. You can now sign up to receive alerts, in order to track the full process of buying and delivering products – another alternative that will help you to monitor your processes and to be always aware of what is happening.
Risk management is a business priority in these days. With this in mind, procurement professionals (especially managers) will have to conceive new ways to manage supplier categories and metrics, as a support for important decisions. Such purchase-based management should mitigate exposure to risks.
Knowing all the regulatory, legal, labor and social security requirements is also a must. In this regard, e-procurement centralizes all purchase requests in a single environment, and helps in various aspects – such as legal qualification, fiscal, environmental and labor compliance checks, technical / operational qualification and financial analysis, which is an additional guarantee to undergo audits and generate more compliance for the company.
Professionals from the procurement area must create collaboration models that differ from the conventional ones, which will enable them to orchestrate complex agreements and multi-supplier service management. One of the most important sayings for current businesses is to generate value. Therefore, the procurement process should be based on economy and society sustainability in general.
While the arrival of millennials to the labor market represents a new line of thinking, which is more aligned with the circular economy, more experienced procurement teams will play a critical role in sharing information about internal and external costs across the company. Together, such different generations of professionals will be responsible for the way businesses will fulfill their commitments of sustainability and social responsibility in the area. Collaboration among companies will also help to map new performance metrics in procurement, as a support to monitor processes and measure what is really important, thus tailoring strategies and identifying new business opportunities.
Procurement organizations will soon act as a channel to find new ways of innovation, creating value in the development of new products or the outsourcing of non-core functions. As a way to advance, such procurement organizations must better understand the role that external entities play to direct innovation in their industries.
To support this demand, many procurement teams will have to expand their expertise in engineering, design, development of new products and social responsibility – such as hiring processes that will involve diversity and inclusion, taking into account people, the environment and, above all, technology.
By Alexandre Moreno, Director of Services at Mercadoe