Procurement is a business function that offers so much in the way of value. However, its not always easy to showcase the full spectrum of what procurement provides to other teams or get the necessary buy-in from sponsors or stakeholders to support procurement activities. In fact, one of the common pain points for procurement practitioners is the ability to align finance.
Finance is a critical business function. So much of what guides operations is based on the bottom line and therefore it is absolutely essential that procurement align with finance. Without this collaboration, procurement teams will struggle to gain credibility within an organization and will be less able to contribute to the overall success of the business. In order for procurement to truly be successful, it needs to align with finance. Here are some tips for helping achieve alignment between finance and procurement.
Develop a reporting structure that promotes collaboration
Reporting is essential for keeping different departments aligned. It’s only logical that the department in charge of managing money and the team that handles buying should coordinate. To really make the most of your collaborative efforts, try syncing on reporting structure to increase adoption. Ideally, procurement would actually fall under the purview of finance wherein the CPO reports directly to the CFO to increase that alignment. Benefits include:
2020 was a great year for thought leadership sharing as everyone suddenly experienced the same issues all at once. Many of the innovations and trends we saw emerge will continue to be essential as we move to 2021. To keep you informed, we bring you a round-up of the top webinars of the year!
5 Procure-to-Pay Trends to Watch in 2020
With the new year upon us, it’s the perfect time to take a look at look at the future of procure-to-pay (P2P).
Industry-leading procurement technology has one job: providing a robust yet easy-to-use system for transforming needed goods and services into value for a company so that it can excel at its own business.
For those who work in any area of the supply chain, diversity is a word that comes up often. Supplier diversity or diversity in contracting are programs that can be either mandatory (i.e., requirement to fulfill state or federal contracts) or voluntary (i.e., procurement/social responsibility strategy).
Whether your organization chooses diverse suppliers for advocacy and social responsibility reasons, to comply with state or federal regulations, or to simply meet your stated requirements and work scope, the benefits of supplier diversity can have lasting impacts on your community and your organization.
Starting a Supplier Diversity Program (SD Program) in your organization requires input and collaboration from various stakeholders at all levels. The SIG Resource Center has a wealth of information to help you begin the process to implement an SD Program, including how to make the business case to internal stakeholders, best practices and benchmarking studies from your peers.
Mary Zampino, Senior Director of Global Sourcing Intelligence
“Resilience is accepting your new reality, even if it's less good than the one you had before. You can fight it, you can do nothing but scream about what you've lost, or you can accept that and try to put together something that's good.” – Elizabeth Edwards
When I was a kid, we never said the word resilience, but we did use the word tough. Being tough is just what we need right now; toughness is our ability to spring back, even when the world around us crumbles (think COVID-19). Our resiliency grows every time we flex – just like a muscle in our body. Developing a resilient procurement team likely means you are “starting over” – or creating a fresh start in some areas of your procurement ecosystem. If you’re feeling stuck or unsure where to start, you aren’t alone. Below are five ways that Procurement can help improve business resiliency:
COVID-19 has created a ripple effect of disruption through supply chains across the world, causing many companies to assess their weak spots and reevaluate their operations to ensure future resiliency and continuity.
Rebounding from the current crisis with more solid resilience is itself creating immense value. Forward-thinking companies are looking a step further, perhaps with the climate crisis clearly in view. They are leveraging sustainability and purpose – with an upside creating long-term value across a wide range of business levers, from competitive differentiation, grow sales revenue, supplier innovation to support future circular business models, talent recruitment and retention.
Procurement’s Key Role in Turning Purpose into Profit
With momentum growing toward stakeholder capitalism, businesses have made a greater commitment to sustainable purpose through reducing emissions of greenhouse gas, limiting plastic use, providing decent working conditions and more. The recent COVID-19 pandemic has brought risk mitigation and resiliency top-of-mind – and we’re seeing clear proof points that sustainable procurement is the answer.
SIG is always asking our event attendees, current and future members, and readers about their current issues and concerns. I have been tracking and analyzing their responses for almost 10 years now. While cost savings and value-add remain consistent and strong priorities, there's no doubt many are very concerned about meeting pandemic-related needs.
We are blessed to have a community of thought leaders and generous, experienced professionals who are willing to share their experiences and describe their wins.
We offer the following resources in your quest for COVID-19 related items specific to sourcing, procurement, and workforce management. SIG members can continue to search for related articles here.
In the resources listed here, you can learn how to set up crow's nest and a war chest, hear how Sprint/T-Mobile are managing the crisis using AI for their spend analytics, specific procurement best practices for today's market, how technology enhances continuity in your workforce and what happens if and when this is "all over." Plus, so much more.
So how do you get from tactical procurement metrics to more powerful spend/supply measures that help build new capabilities and favorably impact critical business outcomes?
We have mentioned some of the more expansive sets of metrics that organizations use to measure several areas:
● Spend/cost management and savings
● Supplier/supply performance
● S2P process metrics for process performance
● Underlying capabilities in talent management, digital, etc.
● Stakeholder-specific metrics related to the above
In this third installment, we’ll dive a little deeper into some example metrics, but the first order of business is to provide a framework giving the backdrop on the KPIs and use it to hone in on metric types before listing individual KPIs.
Pierre Mitchell, Chief Research Officer, Spend Matters
SIG University Certified Intelligent Automation Professional (CIAP) Program graduate Daryl Hammett discusses the three key questions organizations should ask when framing technology decisions in procurement functions to best suit their business needs.
While legacy resource planning systems are key to all global supply chains, they are also cumbersome, expensive and not designed to support the type of relational data businesses deal with to drive decisions.
Procurement organizations are thinking more often about innovating old processing systems. What areas have inherent risks in innovating? To what degree do we change? How do we manage it? Who do we get involved? A lot of attention is focused on getting the results from innovation and change, especially those associated with people. Most companies have implemented procedures to manage and grow innovation, but I believe one of the most under-analyzed risks in innovation, and one that could be the biggest threat going unaddressed today, is the risk of group think in implementing change in procurement teams.
SIG University Certified Sourcing Professional (CSP)program student Kimberly Morelli works at Driven Brands. She shares how essential components such as soft skills and change management can be and how she is implementing newly polished tools and best practices to tackle organizational challenges.
In the CSP program, students focus on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.
My enrollment in the CSP Program from SIG University has proven to be timely and I am excited at the opportunity to have lessons that can be readily applied to our procurement organization. I also was heartened to find emphasis by SIG on positive supplier relationships versus an adversarial stance as used to be popular. The procurement team I am on has been in a state of transformation over the past few years, shifting from transactional buying to category management with a specific focus on increasing our sourcing processes. I found the CSP program to have laid a strong framework that is applicable to my organization, both in procurement and business areas.
Growing economic uncertainty, geopolitical unrest, and emerging cyber threats mean that security and risk management are now critical boardroom priorities. If that weren’t enough, businesses today are not only accountable for the factors that impact them directly, but they’re also responsible for those that impact their suppliers.
Take the recent Quest Diagnostics data breach as an example. Despite Quest’s strong internal cybersecurity infrastructure, the sensitive information of 11.9 million patients was hacked through a third-party billing vendor with subpar security standards. The lesson is clear: a company is only as safe as its weakest vendor.
Many organizations continue to manage suppliers, contracts, and procurement processes manually or with outdated, clunky technology that is too complicated for efficient use. These haphazard systems are, unfortunately, perfect harbors for risk, but there is tremendous opportunity here. According to a recent McKinsey & Company report, 56% of source-to-pay tasks could be “fully or largely automated using currently available technologies.”
While automation isn’t a cure-all, it does have the potential to drastically decrease overall risk. How? By reducing the “human factor” in supplier management and allowing sourcing employees to focus on more critical projects. In addition to putting risk mitigation at the forefront, automating supplier-related processes benefits businesses in these four key ways:
Chris Crane, Co-Founder, Product, Scout RFP, a Workday company