Must-have Trends to Include in Your Next Procurement Strategy
We are working in an “issue-rich” environment, with so many different trends hitting our businesses, it is more difficult than ever to work out which trends we should consider in our procurement strategy.
A well-thought-out procurement strategy defines and prioritises key actions and new approaches in thinking to ensure effective, strategic and fiscally responsible procurement processes. More simply, it serves as a directional roadmap.
When building a strategy, there are many different avenues that lead to improved procurement performance. You won’t find a procurement strategy that doesn’t include cost reduction measures, of course. But there are other critical elements it may address. These include spend visibility, strategic sourcing, improved supplier and key stakeholder engagement, quality management, product development, compliance, sustainability goals and plenty more.
But this blog isn’t about the standard strategy inclusions, it’s about understanding which procurement trends should earn their place, or at least be considered, in your next strategy. Let’s look at a few key trends worth considering as you plan your next strategy.
Digital procurement for efficiency and focus
Procurement has tended to lag behind other departments when it comes to digitising operations, with many still relying on traditional procure-to-pay processes. But the digital revolution and its promises of greater efficiency and productivity can’t be ignored forever.
Digital procurement platforms automate tedious manual tasks associated with sourcing and purchasing, to free up valuable time for more strategic tasks. The right platform can enable digital vendor onboarding, simplify the process of welcoming new suppliers into the fold, reduce errors, speed up transactions, and organise data for better purchase choices.
These platforms also leverage advanced data infrastructures, predictive analytics, and AI to deliver much-needed visibility and insights into existing processes. Insights that can be used to, for example, optimise supplier agreements or evaluate the impact of cost-cutting strategies effectively.
Procurement can be difficult even under the best of conditions. Without a sound technological infrastructure in place, it’s so much harder. If your department is lacking the capabilities discussed above, then digitisation should be a strategic priority.
Strategic sourcing for better spend control
The rise of digital procurement and contract management solutions is also contributing to a shift in focus from transactional procurement to strategic sourcing. Transactional procurement – defined by routine actions such as material requirements planning, invoices and documentation – is a tactical approach to sourcing mostly focused on pricing and delivery times.
On the other hand, strategic sourcing is centred on driving maximum value from purchasing decisions to provide more value to the business. With access to tools for collecting and analysing data, the procurement function is able to claim more control over the company’s purchasing practices by undertaking TCO analysis, supplier audits and development initiatives, value analysis, or exploring new outsourcing models.
Rather than focusing on the blind pursuit of savings at all costs, strategic sourcing offers measurable and sustainable outcomes to elevate the value of procurement in company-wide operations.
Automation for smarter practices
Automation is another powerful lever for improving your procurement strategy.
Get it right and automation will free the procurement team from manual tasks, allowing them to dedicate time to higher value tasks that demand the human touch – stakeholder collaboration, supplier relationship management (SRM), and trusted business advisors.
The potential of automation is boundless. It can be applied to procurement planning, contract management, spend analysis, supplier risk management, purchase orders, invoicing, payments, the list goes on.
User-friendly tools for better service experiences
As millennials and Gen Z enter the workforce, the demand for intuitive digital tools is increasing. By prioritising seamless and consumer-like technologies in procurement processes, organisations can better cater to digitally fluent procurement professionals and streamline processes. It’s not only about productivity either. Providing modern technology helps attract and retain top talent in the highly competitive job market.
For example, self-service procurement portals leveraging learning-enabled procurement chatbots can anticipate user needs and field common enquiries, freeing up procurement teams for more strategic endeavours.
Sustainability for a more environmentally responsible supply chain
Sustainability is an increasingly important consideration for businesses. Driven in equal parts by consumer demand, increasingly stringent regulations and an organisation’s desire to create a healthier world, sustainability measures are becoming a dominant force in modern businesses.
The supply chain presents many opportunities for introducing responsible sourcing practices to minimise environmental impact and meet the growing demand for sustainable products and services.
This could involve purchasing products made from eco-friendly materials, sourcing goods and services locally, or prioritising suppliers with strong sustainability practices, for example, those that use renewable energy sources as part of the manufacturing process.
By incorporating sustainability into a procurement strategy, companies can reduce risks associated with poor sustainability performance while contributing to a more ethical sourcing strategy.
While there is no one-size-fits-all approach to developing a procurement strategy, keeping ahead of industry trends, technologies and best practices will ensure a culture of continuous improvement as you optimise and improve procurement processes over time.
This mindset of innovation and adaptability will be key to proactively identifying opportunities for efficiency, cost savings, and productivity, and further cement the procurement function as a key value driver for the organisation.
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