It is hard to believe 2021 is at our doorstep, and while the immediate future is uncertain, the mid-to long-range outlook is virtually unknown. What we thought would be a ‘two-week’ work-from-home in March, has turned into a full-blown pandemic, and with it, the uncertainty surrounding it. Now, with a new wave of COVID-19 outbreaks breathing down our necks, tough times are here again.
As procurement professionals, we are, by nature, resilient. The toughest of times takes the strongest leadership and most innovative strategies. The pandemic and the consequences of it provided a proving ground for the often-overlooked sourcing and procurement team. Over the past year, sourcing and procurement became the lynchpin for many organizations’ survival, securing critical business and PPE-related goods and services to keep businesses afloat and employees protected. Throughout, procurement professionals were working tirelessly to create innovative cost savings and expense reduction opportunities when other departments went right to cutting staff and payroll.
At a time when the needs of the business are buoyed through critical sourcing and procurement activities, there is, perhaps, no more important function to a business.
Procurement Myth Versus Reality
Unfortunately, not everybody understands that. Many business stakeholders still think of sourcing and procurement as tactical purchasing and contract administrators, or bottlenecks that create delays in the buying process and upset suppliers. In reality, sourcing and procurement is really about negotiating critical multi-million-dollar contracts and finding the right supply chain partners to mitigate the significant risk in today’s market. Critical, not just in savings, but in the essential value and impact you have on the business.
In other words, a high performing sourcing and procurement organization should be seen as a major advantage—with a seat at the table for the decisions that concern top-line growth as well as bottom-line profit improvement. That said, in a recent Ardent Partners’ study—Procurement Metrics that Matter in 2020—stated that as we head into 2021, 90% of CPOs still see room for immediate sourcing and procurement team performance improvement. What worked well in the past will not be enough to succeed in the years ahead. This means we, as procurement professionals, must take new, bold steps if we are to maintain the momentum built over the past nine months. Otherwise, we risk reverting back to our legacy roles.
Now is the time for sourcing and procurement teams to elevate their impact and visibility as true partners to business leaders and bring buying to the board room.
So, how do you get there?
Over the past decade, as sourcing and procurement leaders mapped out their key initiatives, they would look to software to support their goals and objectives (i.e. tighter spend management, increase the percentage of spend that has been sourced/addressed, increase the percentage of suppliers under contracts). And yet, history has shown that approach has been a long, resource-heavy, and expensive investment that typically resulted in an unacceptable ROI. The days of complicated implementations, source-to-pay modules that don’t talk to each other, and resource-intensive toolsets that required significant change management efforts for adoption are no longer acceptable.
Another alternative procurement leaders considered was to hire a consulting firm that “specializes” in sourcing and procurement. Time and time again, these consulting engagements ultimately resulted in an expensive PowerPoint with across-the-board bad grades for the current state of operations. And while they supplied big savings numbers, they didn't provide any of the execution support required to help existing teams deliver against those promises. We hear the same story over and over again, that these consulting engagements were a waste of time, and their often over-inflated view of the savings opportunity (because consultants actually don’t buy anything) caused disappointment when the existing teams were challenged to deliver against those targets.
Fortunately for today's sourcing and procurement teams, the cost of enabling technology, market intelligence, and supporting services is dramatically lower, while the ease of implementation and adoption is significantly higher. The convergence of these offerings provides a new opportunity for sourcing and procurement teams struggling to prove their ROI. Better data visibility can be gained from enhanced analytic capabilities, made possible with new or improved technology, employed by more talented and technically capable resources, and supported with powerful market intelligence. When viewed this way, a straightforward formula for CPOs and their teams to enhance their performance and drive greater enterprise value emerges.
It’s time to change the game for sourcing and procurement, from a cost center to a source of strategic advantage. It’s time to aim higher, take the lead, and bring buying to the board room. The following survey has been crafted to better understand how you and your organization are positioned to take advantage of this new operating model.
Please take 10 minutes to respond to this survey, and you could be randomly selected to receive one of eight $75.00 Grubhub gift cards. The drawing will occur after the survey has ended. Qualified recipients will be contacted via email and be required to respond in order to collect or decline the gift card.
Sam is a Managing Partner at LogicSource accountable for the growth and profitability for the company’s sourcing and procurement services enabled technology line of business – OneMarket®. Sam has over 25 years of experience in senior leadership positions in professional services, private equity and information technology businesses.
Prior to joining LogicSource, Sam was a Partner at ISG the global leader for sourcing consulting, advisory, data and governance where he led the practice dedicated to working with Private Equity firms and their portfolio companies. Before ISG, Sam spent ten years in private equity as an Operating Partner at Kidd and Company and Spencer Trask focused on top line growth and operating value improvement for over twenty middle market businesses. In addition, Sam worked at Gartner Group for nine years where he was Group Vice President and built Gartner’s Worldwide Strategic Account organization making significant contributions to this hyper-growth period in the company’s history as the IT research and advisory global leader.
Sam received his BA in History from Franklin & Marshall College.