It’s no surprise that procurement is changing. The world is networked, people are contactable at the touch of a button and tasks that were previously time-consuming are now instantaneous. Oxford Economics’ recent study lists advances in technology as one of the three major global procurement trends.
Social networks and other network phenomena are paving the way for business change and organisations’ procurement functions need to keep up to make the most of the opportunities for procurement in the networked economy. So how is procurement being affected?
The benefits of the networked economy
Business networks have developed in much the same way social networks did. Networks allow sharing of knowledge and insight, increased communication and dramatically simplified transactions.
Easy-to-use networked systems reduce the burden on administration and encourage cross-organisational use, resulting in improved consistency and economies of scale. Procurement via networked systems offers more visibility and can lessen the likelihood rogue activities and maverick spend. Furthermore, networks can provide enhanced internal communication channels and allow for customer contact points to be tailored and more responsive.
Networking is the gateway to procurement efficiency. Let’s take a look at what needs to be considered to optimise its potential.
Update procurement’s profile
The days of procurement as a standalone department, conducting the organisations transactions, are either long-gone or numbered. Today, procurement’s focus should be on innovation, helping to enable efficient and consistent cross-organisational buying.
This needs to be appreciated internally, across business functions. C-level buy-in is required for this change of mindset, but it’s also procurement’s job to ensure obstacles are removed and the old excuses are no longer valid.
Networks are perfectly-placed to enable this modern procurement way of working. So ensuring their adoption across functions is crucial, and this means education regarding their importance in the context of procurement – and relevant training.
Optimised and automated
While digitisation allows for administrative efficiencies and simplified record-keeping, that’s only the tip of the iceberg. The true potential of automation lies in collaboration and transparency – the very benefits networks enable.
For example, modern contractual arrangements might now include payment percentages that are intended for suppliers to conduct research and development. Internally, the channeling of investment into specialised resources such as these can be managed electronically.
With the amount of data and insight available through networks, all manner of competitive advantages can be gleaned. Experiences can be shared, leading to fellow professionals’ advice detecting potential risk in new suppliers. Real-time stock levels driven by live sales information can help detect potential shortages and trigger purchase alerts.
A modern eProcurement platform should allow for data from across the procurement and delivery processes to be integrated and visible. The benefit of this is that it allows for initiatives such as viewing performance and delivery data in the context of each supplier’s agreement – enabling much more proactive contract management and procurement planning.
Don’t waste any time
The sooner a networked approach is adopted, the sooner its value will be felt. While automation provides a definite starting point, only with the connectivity that networks allow will its potential truly be within reach.
