Embracing the New Reality of Procurement
For many years now, the role of procurement within organizations has been viewed as a necessary but static business layer. Focusing specifically on reducing supplier costs and improving business spending visibility was typically where the priority list started and ended for procurement teams. In this previous reality, getting a seat at the executive table was hard to imagine for many procurement professionals since their strategic business and continuity planning involvement was limited at best. In 2020, however, everything changed.
New disruptors driving innovation and change in procurement
Following the outset of the COVID-19 pandemic, many businesses were left scratching their heads as to how to exist in an alternate reality of primarily remote workforces, scarce resource availability, and growing supply chain risks. However, while these challenges have no doubt been difficult for many to overcome, they have also forced an unprecedented evolution for procurement.
Today, procurement is being asked by organizations to pave a new path for business growth and sustainability. By positioning procurement as a staple for operational resilience, organizations now rely on their procurement teams to provide actionable and transforming business insights around supply chain risk, resource continuity, and contractual liabilities.
In addition, procurement teams are being tasked with optimizing their partner relationships more than ever before, requiring in-depth knowledge about their spending, contracts, and payment terms. This involves thinking past short-term fixes and helping their organizations position themselves for long-term scalability and sustainability. Technology-enablement has now become prioritized in order to bridge the gap between legacy procurement processes and the new norm.
Leveraging technology to seize new business opportunities
To meet the growing business demands on procurement teams, organizations have begun investing in new technology solutions to better optimize their client-supplier relationships. Solutions like Coupa Contract Lifecycle Management are being used to increase efficiency and control over all business contracts in an organization and give procurement professionals the visibility they need to extract more value from current and future partnerships.
There are many variances to consider when navigating governance, compliance, control, and visibility across all business contracts. Some of the questions procurement teams need to answer moving forward are:
- Do I have quick access to all my business contracts?
- What are our "out" clauses or minimum order requirements?
- Are my payment terms reasonable?
- Am I eligible for early pay discounts?
- Do I have enough information from my suppliers to make informed business decisions?
Many of these questions require immediate access to relevant data points that used to live in multiple databases or separate supplier portals. Today, procurement teams are able to implement modern agile solutions that digitize the entire contract management process. AI-driven technology, as found in KPMG Cognitive Contract Management, can be used to automate data mining workflows, bringing hidden contract language, clauses, terms, and other relevant information to the forefront. These tools and solutions are invaluable in procurement's new reality and have allowed it to be positioned as a true leader during the global economic disruptions.
Better managing supplier risk
The ongoing economic uncertainties have put more onus on procurement teams to understand and manage supplier risk more closely than they've ever needed to. Now taking a seat at the executive table, procurement leaders are being tasked with applying governance frameworks and policies into their supplier management processes. This involves more than just having a deep understanding of the financial or organizational state of their suppliers, but also the suppliers of those suppliers as well.
Diagnosing all areas of supplier risk can be a daunting but extremely vital task for any procurement professional. However, more and more organizations are now moving towards integrated solutions to simplify the procure-to-pay process while keeping teams up to date on changes in supplier risk profiles. Supplier Risk Management (SPRM) solutions like Coupa Risk Assess, for example, leverage automated workflows and AI-driven bots to provide real-time notifications to procurement leaders when adverse events impact suppliers, and help to rank their risk profiles across all other partnerships in the organization. As the effects of COVID-19 continue to heighten the need for better risk management across an organization, SPRM solutions and services will continue the play a significant role in business continuity.
Focusing on better communication and collaboration
Regardless of the department or industry worked in, everyone has felt the impact that COVID-19 and associated social distancing measures have had on communication and collaboration in the workplace. This has meant significant adjustments for procurement professionals with how they address internal communications and how they collaborate with the suppliers they support. With so many businesses temporarily or permanently abandoning their legacy communication methods, organizations are now focusing on bridging the gap between old and new ways of collaboration.
To achieve this goal, procurement teams are again relying on new technology solutions to streamline communications with all of their suppliers within one unified platform. This has significantly improved both buyers' and suppliers' relationships while ensuring end-to-end visibility for everyone during the entire procure-to-pay process. However, there have been even more business benefits for companies.
Technology platforms like Coupa not only facilitate better collaboration between buyers and their suppliers but have also brought communities of procurement professionals across various industries together under one roof. This allows organizations to drive intelligence and share best practices with other like-minded professionals and gives procurement leaders the ability to benchmark their various activities and success across other organizations within the same industry. This community collaboration offers organizations and their procurement teams the tools and information they need to help build a sustainable business future.
The bottom line
Organizations have learned a lot in the years leading up to 2020. However, the unprecedented disruption of COVID-19 has forced a new realization for businesses that procurement needs to be positioned as a leader in business continuity and performance. For procurement teams, your time is now. Rather than feeling shackled by global economic disruptions still ongoing, procurement leaders should be seizing the opportunities available for change while playing an active role in paving a new path for the organization, now and well into the future.
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