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AOP BlogFuture of ProcurementProcurement Transformation

How Procurement Can Fuel Growth and Increase Enterprise Value

By November 30, 2021No Comments

Procurement has been on an evolutionary journey for years now, constantly reevaluating its priorities and shifting its talent, technology, and strategies in response. Transformational leaders have seized this opportunity to reposition procurement’s role and elevate its contributions to the enterprise.

By automating transactional work and empowering business users, forward-looking procurement teams are accelerating corporate growth and advancing ESG initiatives such as sustainability and supplier diversity. Their efforts have been truly transformational, ultimately leading to the C-level espousing a broader perspective on procurement’s value potential and the level of influence it should have on company-wide decisions.

At Mastermind LIVE Fall 2021, a keynote session saw Dr. Elouise Epstein, renowned advocate for disruptive procurement technologies, explain why companies must embrace digital transformation of the function or face losing out to their competition. As she says in her recent book, “We are on a journey to reimagine procurement. … There will be villains, challenges and rewards.” If procurement is going to be ready to embark on this “hero’s journey” and emerge victorious, we must have a clear understanding of the technology and talent that will either allow us to proceed or hold us back.

This theme was echoed as Art of Procurement and headline sponsor, Globality, brought together a panel of forward-thinking procurement executives for a thought-provoking discussion moderated by Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader at The Hackett Group. He was joined by Diarmuid O’Donoghue, Senior Procurement Manager, Digital Transformation at BT Sourced; Alejandro Schipani, Head of Global Delivery at Aquanima, Santander Group; and Axel Tigges, Vice President Indirect Procurement, Professional Services, GEA Group AG.

Chris asked about their teams’ ability to fuel growth, and the answers demonstrate the kind of visionary perspective required from leaders who are truly prepared to facilitate lasting change:

Repositioning Procurement as an Engine for Growth

Procurement has to be able to thrive in continuous transformation as it constantly repositions to create value for both the company and the community at large. As Diarmuid O’Donoghue explained, “We will always have savings targets, but flipping metrics around so that procurement professionals are seen as revenue generators and innovators … it is a total shift in how people view procurement.”

In terms of sourcing that “fuel” for growth, BT has been uniquely successful in bringing innovative technologies and platforms into their best-of-breed ecosystem, broadening the sense of what is possible and taking a healthy approach to risk. None of their achievements would have been successful without the creation of a “safe space” where projects and ideas have an opportunity to succeed or fail—a reality that is still deemed better than never trying to break new ground in the first place.

Taking Procurement to the Business

Procurement has had plenty of opportunities to bolster its own digital talent over the past few years, but it is now using intuitive digital solutions to empower business partners and stakeholders to meet their own needs through self-guided buying. When AI is leveraged as part of a best-of-breed technology ecosystem, procurement retains the data and insights required to be agile while giving buyers the greatest freedom possible. But distributing power into the business doesn’t mean giving up control—instead, procurement needs to bring the business into the buying process by providing them with guided autonomy.

Axel Tigges calls this approach to stakeholder management a “digital mindset”: “We try to use alternative sourcing solutions to help the business better specify their demand. Of course, the price matters, but these kinds of solutions help us also focus on sustainability, diversity, and other important levers that show [the stakeholders and company] that we are adding value on a very different scale.” It is this digital literacy, especially when positioned as the basis for improved relationships between procurement and the business, that will finally reposition procurement’s brand as one associated with growth and value.

Using Technology to Support the ESG Agenda

Although ESG initiatives are high-profile efforts often championed by procurement, their processes and frameworks should be able to accommodate ESG among many other value-based initiatives. One of the key factors to being able to make measurable progress toward ESG objectives is access to data—data that are fully integrated with standard sourcing processes and self-service buying.

As Alejandro Schipani has observed, each organization has a different level of appetite for ESG-driven decision-making, and that should be reflected in their sourcing strategies and supplier partnerships. “If I can let the platform do the heavy lifting from a process standpoint, then I can dedicate the time to develop supplier innovation, helping us balance what we want to do with what we have to do.”

Digital Solutions Key to Procurement’s Elevated Role

Chris Sawchuk has seen similar trends and approaches across the world-class organizations that partner with The Hackett Group. As he noted, “Digital technologies are not only simplifying procurement processes, [but] they are [also] creating an improved stakeholder experience and a more agile, flexible, and resilient ecosystem.”

These innovative technologies are making it possible for procurement to fuel growth and move the needle on ESG objectives at the same time. If procurement leaders combine adopting new digital solutions, leveraging data, and embracing new talent, they will be well placed to create competitive advantages for their organizations.

 

Click here to read an exclusive extract from Dr. Elouise Epstein’s new book Trade wars, pandemics, and chaos: How digital procurement enables business success in a disordered world

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