Five steps to future-ready procurement

The role of the procurement function is changing; from simply managing costs, to one of adding value, managing security and building closer—and more strategic—relationships.

It means that external interfaces and the technology supporting them are increasingly important, as organizations become more networked and alliance-based. Planned and deployed correctly the potential is exciting—from decision dashboards to a reduction in repetitive and manual document requirements and auditing—bringing benefits to both the buyer and the seller.

But while everyone is talking about future proofing and transformation, few have the operational expertize or insight to confidently put it into action. To overcome the hesitancy to implement change, you need a strong sense of what a future-ready function could mean for you, and what it might look like. And with 95% of CEOs seeing technological disruption as an opportunity instead of a threat, it’s time procurement started thinking the same way.

With ‘greater speed to market’ at the top of the agenda and product cycle times getting shorter, the challenge facing procurement is only going to increase. Add to this the rise in global suppliers and markets, evolving political landscapes and increasingly informed buyers, you can see why it’s now more critical than ever to act, with vision.

Sitting at the nexus of internal and external insight, there is a big opportunity for procurement to become the orchestrator of supply chains as companies form to become ecosystems: with the right solutions and methodology in place to enable partners and suppliers to ‘plug in’ to workflows and process flows. But there are many challenges that, unaddressed, could stand in the way of seizing that opportunity. These include how to make sense of the huge and growing volumes of data produced by increasingly complex supply chains, and turning that data into value.

Then there’s the evolving technology landscape to navigate, from research-heavy tech giants to the myriad of small start-ups; finding the right one to stand up in an ever-changing procurement landscape is a minefield.

Future proofing and procurement transformation are interdependent; an increasingly volatile and disruptive future can only be managed with a clear design of your future state, made possible with a future-ready operating platform in  the cloud.

How future-ready is your procurement team? Here’s a sense of what KPMG professionals would expect from a top decile organization; how many statements can you answer yes to? 

1.  An agile function
   “We have a cross-functional team who continuously monitor and proactively eliminate obstacles to efficiencies. And we have structures in place that can help accelerate implementation, enabling flexible changes to core processes – like replacing a supplier or introducing an open-book policy in the supply chain.”
   
   
2. A new role for procurement
   “Our purchasing and supply managers are empowered with insights to fully understand the results of their work on the end-product and/or service – and on the user and customer. So we can clearly identify the value procurement is adding to the business; gaining respect across the company. It gives procurement more control; enabling our department to advise the business as an internal partner.”
   
   
3. Well managed risk
   “Our structure and processes means that we can make smooth, fast and reliable decisions, even in stressful circumstances or where time is of the essence. These resistant structures protect our company from external shocks, structural breakdowns and disruptions by applying stress tests and supply chain risk management tools.”
   
   
4. Partners as peers
   “We work collaboratively with suppliers – harnessing their brainpower to capture innovation and create an ecosystem – working together to do things differently. With an eye on trends, a clear view of data, and the agility to work closely with our partners, we can ensure success over the short, medium and long term – even in the most uncertain times.”
   
   
5. A global-local balance
   “We procure and employ locally, while also developing and utilizing value creation and ecosystems within our local economy. We don’t replace globalization with localization; we combine both strategies to form an enterprise-specific balance, taking into account economic effects along with cultural and sustainability considerations.”

Can you confidently say you have the capability to act in these ways, with a model that’s built to adapt with the future?

With the right forward-looking approach, tested methodology and pre-defined future-state vision, you can stop delaying and start to proceed with the visibility, confidence and evidence to ease buy-in and implement change—without fear of the unknown and the risks that go with it. Elevating your status in the enterprise.