As the commercial world evolves with Industry 4.0, the new revolutionary change, focus on analytics, BI capabilities and artificial intelligence with a digital first, innovation mindset is crucial.
Some key areas a modern procurement function should focus on:
Sustainability / ESG: The UN describes sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” There is no silver bullet here but it is an aspect which must be expressly and routinely considered with all sourcing decisions.
Supply chain diversity, supporting local and indigenous businesses: This area of procurement is usually surrounded by buzz words and sound bites and generally nothing of significance is achieved. A structured, quantifiable and measured mentoring system to support local businesses is key.
Negotiation Factory: Standardize negotiation practices with RFQ pricing templates, best of benchmarking, negotiation scripts and role plays (pre-negotiation briefing). The idea is to have the best procurement resources deployed in negotiation (e.g. technical support leaders, finance personnel and other SMEs). This way we can maximize the value from all negotiations through cross-functional collaboration - not just the ones conducted by contract owners.
Preferred customer status: Understanding what it takes to become a preferred customer and having open and transparent dialogue with key suppliers. Through reverse-scorecarding suppliers can evaluate and score specific cutsomers which then allows us to identify and implement ways in which we can ensure our performance as a customer. This allows working towards favourable treatment, direct investment, and innovation.
Supply chain early warning system: Use of intelligence, data, and artificial intelligence to detect relevant trends and risks in the supply chain allowing rapid review and response to mitigate future events.
Other key areas of focus:
Smart Contracts to become more prevalent for non-critical contracts.
End to end digitization of the procurement function.
Use of data and analytics as the cornerstone for decision making (spendcube, data science).
Use of AI in procurement.
Agile procurement.
Revenue generation.
Deliver value beyond cost:
Innovation & growth
Risk management
Capital optimisation
Speed, agility, sustainability, quality and service
Become a strategic partner and steward for your organisation.
Leverage and engage key suppliers in strategic dialogue focused on long-term creation of mutual value.
More inclusivity in procurement process and negotiation of KPIs/SLAs.
Industry know-how, strategies, supplier preferencing/positioning, innovation hub.
Multi-faceted skill set will open wider opportunities.
Manage the right suppliers.