The nature of procurement and supply chain jobs must change in three significant areas if the procurement function is to move from cost control to value architect, an expert in procurement innovation suggests.
David Rae, Director Insights & Innovation at Procurement Leaders™, believes that CPOs can transform their teams from cost watchdogs to innovation-driven value creators via three bold steps.
Align the procurement operating model with company strategy
Rae believes that category management – third-party spend segmented into raw materials, office equipment, semiconductors, etc. – should evolve to encourage suppliers to align their products and services to the company’s product portfolio. It will encourage supplier innovations to feed more successfully into maximising the company’s competitive position in the market and enhance value creation.
CPOs must ensure that procurement is as frictionless as possible for buyers, whether they are permanent employees or supply chain or procurement interims. Automation via digital technologies and platforms is indispensable for achieving this. The ultimate aim is to cut time and resource expended on non-core products and services, without compromising the goal of minimal cost, sacrificing quality, or introducing risk. Such an environment would be underpinned with digital technologies designed with end users in mind, all under robust governance.
Engage with the most innovative outsiders
Supply markets are changing rapidly. A large and fast-expanding volume of the world’s innovation comes less from big corporates and large traditional suppliers, and more from smaller, niche companies, including rising numbers of start-ups, which are less process-led than their big counterparts and more capable of agile adaptation to changing needs. They are developing new technologies and approaches that consistently disrupt the bigger players in incumbent markets. CPOs must tap into this ‘outlier’ talent pool by traditional onboarding as suppliers or other means, such as technology licensing or collaboration with other suppliers in the network. If done well, Rae says: “procurement will evolve from a position of controller to one of value architect.”