Procurement is now a function deeply aligned to the business.
Long regarded as being the support function of dealing with suppliers, procurement has progressively emerged as an increasingly strategic role in managing operations to stay ahead of the competition.
“Procurement is fast evolving to focus on business value and enabling supplier innovations as opposed to just driving procurement savings through cost reductions,” SAP Managing Director Bernard Chiang told Business Circle recently.
“The rise of globalisation, outsourcing, and rapidly changing market dynamics have prompted companies to adopt more variable operating models to maximize agility and minimise risks. This has resulted in businesses being more dependent on external suppliers, talent, and partners which means that procurement has been thrusted to the forefront to drive value across an entire value chain,” he added.
“Thus, the role of procurement is fast evolving to tap upon collective insights and ‘best practices’ to do things do things more efficiently and in entirely new ways.”
Chiang also said that, with the automation of core business processes, procurement will finally be freed from the basic blocking and tackling of negotiating agreements, managing suppliers, and executing orders.
“Visionary companies expect their procurement departments to spend more time working with suppliers, developing supply, capturing innovation, and driving year-long roadmaps to create value,” said Chiang.
Sourcing and procurement software from SAP can transform businesses through better collaboration with suppliers, while delivering smoother operations with improved spend insights coupled with higher compliance, he added.
He also cited the case of the Sunway Group (pic) and how it had successfully implemented a procurement transformation plan.
As a result, the Sunway Group today continues to enjoy improved transparency and has realised exponential savings and sustainable competitive advantage through this metric-driven approach. Its 13,000 employees are also able to leverage on-demand applications and standardisation of its procurement practices.
Procurement now deeply aligned to business
Meanwhile, at a chief procurement officer roundtable event held in Kuala Lumpur recently, the company’s Head of Regional Procurement (Asia-Pacific and Japan), Global Procurement Organisation, Erich Winsloe said that procurement is today a strategic function that is deeply aligned to the business.
“Increase profits these days is about shifting from revenue growth to procurement savings,” said Winsloe (pic). “Procurement’s true role is to be a partner to suppliers.”
“Procurement is increasingly assuming a strategic role in managing today’s virtual enterprise, leveraging technology to simplify complex business models and managing operations in a dynamic way to be a step ahead of the competition,” Winsloe further said.
“Procurement is fast evolving from service to function as an enabler for supplier innovations as opposed to its traditional role of merely just driving savings via cost reductions.”
He further elaborated that these developments stem from the fast changing landscape encompassing the emergence of millennials in business operations within the globalised economy whereby incidents can have significant impact on global supply chains.
Winsloe also said that the trends of cloud, mobile, social and big data also results in disruptive technologies that, among others, changes business models and enables faster innovation cycles.
Therefore, procurement today assumes the added responsibility of being “a value generating business partner to the business for all procurement-related activities.”