Procurement is undergoing dramatic change and organisations will need to embrace new models of business in order to avoid falling behind their competitors in the future. Driving this change is an environment of increasing uncertainty and risk, a greater need for spend visibility and the development of web based procurement software.
The challenges facing procurement teams
According to the Deloitte 2013 Global CPO Survey, published last December, half of the participants felt that levels of procurement related risk had increased. CPOs looking to control risk need accurate and complete data if they are to make the right choices in crucial business decisions. Companies that still rely on manual systems will find it difficult to capture all the data they require and will need to look at implementing systems such as e-procurement solutions that streamline and capture critical data. So, is this the end of procurement as you know it?
In addition to cutting costs and protecting from risk, CPOs are becoming increasingly focused on meeting the demands of internal clients whilst company leaders are looking for accountability and measurable success.
Opportunities to stay one step ahead
Procurement teams that focus on adding value by helping their internal customers to buy better will be perceived more positively than those that continue to focus only on managing their relationships with suppliers. To achieve this goal it is essential to implement the right tools for effective data management. At the very least, the right tools need the facility to accurately measure cost. Today, many companies that rely on manual processes simply cannot define their costs; “We think we spend between 50 – 250 million euros on certain categories of products, but we just don’t know” admitted the head of procurement for a large group. In the future, spend visibility will become an essential metric that companies must measure.
The end of procurement ?
The procurement industry faces many challenges but early adopters of new technologies such as web based procurement software will benefit whilst those who refuse to embrace change will be left behind.
Implementing positive changes will ultimately lead to the growing recognition that procurement decisions have an impact on profitability not just through cost saving but through driving strategic decisions, serving internal customers and controlling risk.