Reinventing procurement: 5 ways to turn crises into prospects using supply chain levers

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JonathanHughes.jpgThe procurement function is at an inflection point. At many leading companies, the role of procurement has been transformed in profound ways that make the procurement organization a linchpin of enterprise strategy. Meanwhile, many procurement groups continue to struggle for influence – in large part because they remain trapped by paradigms that, while still prevalent, are decades out of date.

To adapt to a future that is already upon us, the procurement function needs to reinvent itself, Jonathan Hughes, Strategic Sourcing & Supply Chain Management Practice Leader at Vantage Partners, tells SmartProcurement.

In today’s global business environment, an increasing proportion of opportunity (and risk) with suppliers involves not only physical materials or equipment, but also complex services and intangible assets like intellectual property, data and brand equity.

At the same time, the need to drive innovation is paramount.

The strategies and skills that have constituted a recipe for procurement success in the past need to be re-evaluated, and to some extent up-ended, based on a 21st century world with new risks, threats – and opportunities.

Based on benchmarking and work with best-in-class procurement organisations around the world, and across multiple industries, the following five strategies emerge as the keys to future sourcing and supply chain management success.

1) Focus on delivering total value to the business, not only cost savings
2) Focus on sourcing solutions and innovation for the business, not only goods and services
3) Work to become a “customer of choice” with key suppliers
4) Work to become a trusted advisor to internal stakeholders
5) Increase human capital investment within the procurement function

Jonathan Hughes will unpack five ways to turn crisis into opportunity using supply chain levers next week at Smart Procurement World Indaba. In his presentation he will share what Vantage Partners has learned during its work with leading procurement organisations around the world as they seek to adapt to a future that is already upon them.

Smart Procurement World Indaba is happening in a week’s time at Gallagher Convention Centre from 13 to 15 September. “The event has a very relevant and outcomes-based agenda looking at cost containment and value for procurement and supply chain management in these economic times,” said Hughes.

To understand the future of procurement, it is useful to briefly review its history and evolution.
For a very long time, procurement was a back office function focused on processing transactions. The selection of suppliers, and the negotiation of supplier agreements, was highly fragmented, unsystematic and non-rigorous.

It began to change in the 1990s with the advent of strategic sourcing. Over the past several decades, this simple but powerful discipline has delivered enormous savings at countless companies, and earned procurement groups a substantial degree of respect and influence.

See you at Smart Procurement World.
 

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