Procurement of the future for Building Societies

  • David McGonigle, Director |

3 min read

As we fast approach the end of the 2020 which may be reported, from many aspects, as perhaps one of the most challenging years, it’s good to look ahead at how procurement will evolve. 

Procurement as we know it, is changing. Building societies are now looking at it as a broader function with increased strategic responsibilities. In my opinion, the future viability of organisations is at stake because of disruptions, and re-evaluating procurement is the way forward.

Consumerisation, expanding regulatory requirements, pricing pressures, an ever-evolving industry landscape due to merger and acquisition (M&A) activity, and shifts to outcome-based pricing are all key factors pushing procurement to change.

To sum up everything in one word, digitisation, I would say is the catalyst behind this transformation. Innovation, supplier and customer relationships, and a decentralised operating model are the answers that will help procurement leaders support the business in these dynamic times. 

The future agenda of procurement depends on the following trends

1. Supplier-centric procurement

An organisation that can build relationships, can sustain longer than anyone else. Supplier centricity is based on integrated relationships. Unlike the existing procurement which is tactical and lacks real insight or platform integration, supplier-centric procurement will drive supplier performance while fostering innovation and mitigating risk.

2. Category innovation

Category innovation supports organisations in delivering the most optimal commercial model, and planning ahead of the market, as opposed to the traditional approach of reacting to it. It helps unlock value through automation, data and analytics, predictive artificial intelligence (AI) and more.

3. Customer-centric procurement

Ask your internal customers to rate your procurement, and you’ll know if they are not satisfied. Customer expectations have changed, and this is the time to make the shift in your procurement patterns. Procurement of the future includes systems, processes and people.

4. Digital procurement platform

It is time for procurement leaders to look at automation as an enabler and replace manual tasks with technology. It will act as a link between data and automation creating integrated processes and meaningful insights. This will lead to the procurement function making better, well-informed decisions.

5. Insights and analytics

Data and analytics play a key role for enabling supplier-centricity, customer-centricity and category innovation. It also integrates the previous disparate and fragmented data sources to deliver accurate data points. This integration will bring the much-needed change from descriptive to predictive, did-cost to should-cost, auditing to proactive compliance to mistake proofing, and reactive sourcing to automated sourcing and bid evaluation.

6. Workforce of the future

Along with having commercial acumen, tomorrow’s procurement workforce should be empathetic, technology conversant, and analytically fluent. Procurement leaders need to prepare their future workforce for category strategy, category innovation and top of the value chain activities.

7. Agile operating model

Category managers are now perhaps a thing of the past. The future holds agile operating models that integrates all the functions, and includes – structure, decision making, culture of the organisation, capacity for change, performance management and leadership.

 

It is evident that the scale and speed of transformation required to address the disruptors is unprecedented. The key to a better procurement future is to turn these disruptors into opportunities for competitive advantage and growth.

To know more about procurement of the future contact David McGonigle, Director, Powered Supply Chain & Procurement.

Interesting