Why do Procurement Teams Need to be Agile? – Part 1
July 8, 2013
Understanding the Procurement Landscape with Gartner’s 2013 Magic Quadrant Report for Strategic Sourcing Application Suites
July 12, 2013
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In the previous blog we spoke about various factors from global supply chain to changing consumer preferences that require bringing agility into the procurement teams.

Need to be AgileIn this blog we will deal with the ‘How’ i.e. how can organizations make procurement teams agile?

  • Procurement needs to define the value it wants to deliver or what it aspires to be? Until sometime back, procurement was viewed as a cost center even though this is still one of the responsibilities of procurement, it’s not the only one. Procurement must define the value it adds to the organization. This can help procurement get the much needed management support which is essential for rolling out any major changes in procurement policy
  • There’s always this constant pressure on procurement to cut costs. However, just cutting on supplier profits is not the right thing. What is essential is to reduce total supply cost. This includes carrying out thorough research of supplier market and the product in question, identifying the right place or supplier for sourcing, etc.
  • Sourcing project is often huge in terms of the monetary value and complex, if it involves sourcing of services (legal, marketing etc.). This requires procurement teams to invest in proper project management wherein the entire project has been well defined with stakeholders assigned for every task. Project delays cost the organizations a lot of money and time
  • Procurement teams should not just measure suppliers but value them by building a relationship with them and sustaining it. Good supplier relationship provides a great deal of flexibility to the procurement teams that can help them tackle unpredictable scenarios like inventory destruction due to natural disaster, sudden surge in consumer demand etc.
  • Great technology, favorable market conditions etc. would be of no help if the organization doesn’t have the right procurement talent. Organizations should invest in hiring and training the correct talent.
  • Wherever possible procurement should invest in technology like using P2P for processing POs, contract templates for writing contracts, spend tools for managing analyzing spend etc. to make their lives easier. The idea is to automate non value adding task so procurement has more time for strategic  activities
  • “In God we trust; all others must bring data.” goes the quote by W. Edwards Deming. Data on organization spend, suppliers etc. is valuable and should be well organized basically turned and into valuable information that can provide detailed insight into procurement affairs and thus use it to organizations advantage.

With volatile business environment, procurement needs to evolve and build its capabilities to meet the ever changing demands of the business, in short be agile.

 

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