Support Procurement’s move from support to strategy by leveraging data tools
Historically, procurement has been a functional arm of an organization, focussed on procuring the goods and services that drive your business.
Yet, with modern market conditions and supply chain issues, the procurement function needs to become more strategic, saving on costs, forecasting with data, and leveraging technology for more efficiency.
In this blog we will explore the causes behind this shift in focus, what this means for operations, and the role that data and tech will play in creating a modern procurement center of excellence.
Why does procurement need to become strategic?
Procurement excellence will ultimately come down to how successfully this function can navigate supply chains, and market conditions, all while maintaining supplier relationships that can stand the test of time.
Here, we will list some of the main issues driving a shift to strategy in the office of the CPO:
- Supply chain issues - When global supply chain issues occur and markets become more unpredictable and tumultuous it’s tough to operate successfully without the ability to quickly adapt strategy on the fly, in line with pre-formed forecasts and predictions.
- Globalization – Global trade has created new areas for procurement to operate, and markets to be explored, which can be useful. Yet, the globalization of trade can bring its issues. Geopolitical and economic environments mean supply chains are subject to much more change and uncertainty.
- Sustainability Considerations – As the world modernizes and changes, sustainability has become a much bigger driver of compliance. With increasing ESG reporting compliance and other procurement considerations, teams need accurate and succinct ways to monitor and report on sustainability, such as Scope 3 Emissions.
- Risk Management – All these changing factors create risk for an organization, and it's up to procurement teams to form strategies to combat and manage risk successfully, this requires data to understand risk and lead with data-driven insights.
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How does a strategic shift affect procurement operations?
Naturally, by evolving into a more strategic role, operations will change, and teams will have to adapt.
To drive success, various functions such as HR and Finance will have to collaborate with procurement to ensure staff are supported, data can inform process optimization and the right tools are leveraged to support this.
Becoming a strategic procurement function requires some cultural change that will align with technological implementation. Strategy needs accurate and integrated data to work, but many procurement functions may still use legacy systems that create an obstacle to strategy due to poor data flow and processes, and a lack of collaboration.
Similarly, employees must adapt their approach to procurement tasks so they can focus on strategy. This requires work with HR to ensure that employees can bridge any skill gaps that may exist and that they are confident using data tools to form coherent and informed strategies.
Less time should be spent on data consolidation, such as manual data entry, as this eats into the time that teams should be spending on strategic tasks. Yet, employees need easy and intuitive access to data, visibility of all data, and a single source of data truth.
To demonstrate the value of strategic procurement operations, more stakeholder engagement will be required. Yet, with the data tools that agile strategy requires, it will be easier to report on performance and whether a strategy is successful.
The role of data and technology for strategic procurement
It remains clear that for procurement to become strategic they need data tools and modern tech stacks so they can get the necessary data they need to form strategy. Enterprise Resource Planning (ERP) is a key solution that can consolidate an organization's data across multiple functions.
When data is integrated into Cloud ERP, rather than contained within data siloes, it becomes much easier to understand the effects of procurement practices across an organization.
Moreover, leveraging modern Cloud ERP can also provide capabilities to enhance productivity for procurement teams. Manual data entry eats into strategic tasks, so using automation can help alleviate these workloads on teams and allow them to actually analyze data for strategy.
Equally important, automation can reduce errors across the procurement data stream, as when teams are encumbered with manual tasks they can fatigue, and this can lead to errors – with certain documents this can be costly. Ultimately, accurate data is vital for accurate strategy.
With an increased need to be strategic, procurement teams can feel they are being asked to do more than is possible with the legacy tools they currently have. Without data tools like ERP to consolidate, integrate, and increase visibility of data, it will be very hard for procurement teams to remain competitive and drive strategy.
How can Unit4 help your procurement function become strategic?
Unit4 Source-To-Contract by Scanmarket is an ERP solution that enables procurement teams to refocus on strategic tasks, by reducing manual workloads and benefitting from the capabilities available in Cloud ERP.
