The Winds of Procurement Change are Blowing Strong

As business continues to become increastingly global, the definition of end-to-end is changing.  Companies formerly thought of processes like procure-to-pay as internal only. However, as supply chains stretch further around the globe, they are fast realizing that it has greater strategic promise. And they are using the more accurate term source-to-settle to describe a process that includes collaboration across multiple external partners, including suppliers, customers, and banks.

In addition, the process, which used to be confined to just souring, now includes design. Suppliers – and their supplier’s suppliers – are becoming part of the real-time fabric of the digital economy – because customer expectations continue to rise and the ‘market of one’ is becoming a reality.  Business processes that start on the edge of the enterprise, move through the core and are likely to traverse several process areas and lines of business before they are complete.  That’s putting incredible pressure on product design, product iterations, and the shrinking cycle time of products from design to in market to obsolescence.

 Imagine you are a ‘traditional’ manufacturer, that has been casting brass for 100 years and you now find yourself having to include electronics and software in your devices to compete in an Internet of Things (IoT) reality. Your sources of supply in a global geography have just gotten exponentially more complicated. Add in the requirement that all of this needs to happen in real-time and you’ll quickly see that most companies are faced with a business reality that their current processes and capabilities cannot meet. As a procurement or supply chain professional, you still need to do your day job of generating savings, ensuring process and product compliance, managing relationships, and being an innovator.

So, given that context, what are the top three operating imperatives for procurement in the digital framework and how will they move companies forward?

  • Make sure you are solving the whole problem
  • Digitize business processes inside and outside your four walls
  • Be ready and able to scale up and down based on the internal and external partners capabilities.

Make sure you are solving the whole problem

It’s probably not as important where you start your journey (your business case should guide you on this), but it is critically important that you understand the end-to-end game plan.  procure-to-pay is no longer.  It’s a piece of the larger Source-to-Settle business process and modern companies with a focus on speed and agility need to understand that.  As mentioned earlier, collaboration in the design and sourcing of new products will differentiate winners from losers in the new digital economy.  Relying only on your existing network of supply may limit the innovation you deliver.  Being open to the opportunity of discovering new sources of supply is critically important for design, cost, supply chain efficiency, and long-term service capabilities.