What is very obvious and certain for every organization’s procurement team?
That their success is measured by savings that they make, but the business demands that they deliver beyond hard cash.
Saving as ultimate goal of procurement
Saving is the ultimate goal of procurement and always will be. Thibaut Eissautier, CPO at Diageo said in 2015 World Procurement Congress that “Procurement can’t forget savings. It’s what gets us seat at the table. The moment we lose the focus on savings, we lose our most valuable proposition“.
Yes, value and savings aren’t mutually exclusive but they are problematic. For maturing functions, the tendency has been to focus on creating and demonstrating savings so that key metrics are around consistency, quality and price of supply. A sensible approach, but one that’s difficult to break out of once it’s woven into the fabric of the business.
What beyond savings
Value can be delivered not just by savings but also through sustainability, supplier enabled innovation and change management.
Eissautier stated that it was important to be focused on the areas in which you want to capture value. He said that they at Diageo focus on four areas – cost, end to end value, better solutions and sustainability.
The team looked to supplier enabled innovation to deliver value and worked with suppliers to enhance their relationships. BASF’s Walter-Munstermann said that sustainability was one area that his team was looking, and finding, value.
Change the obvious
Changing the obvious, talking about what is beyond normal is going to be key for organizations to flourish given today’s macroeconomic scenario.
A future without talking about savings seems unrealistic and, at least for organizations in the early stages of procurement maturity, savings provide a vital foothold and justification for their activities. But shifting from obvious areas where organizations normally measure value, it is also of vital importance for procurement to find a way to measure value.
One of the prerequisites to focus on values is to first have the procurement house in order – which involves getting in depth visibility into your procurement & establishing streamlined processes which ensure compliance & minimal manual interventions, thus freeing up procurement to think more strategically as a value contributor.
So what is your organization doing to think beyond the obvious? Tell us what you think on this. You can also tweet to us on @Zycus
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