Cost Management Processes Alone Won’t Cut It in the New Normal.

The three C’s of procurement - Cost, Control, and Compliance have sat at the core of our profession for decades. But in an era of volatility and strained supply chains, these functions alone no longer cut it. Procurement needs to evolve into a business-enablement function.

I propose a new Book of Procurement that embraces the broadening of our purpose. Here are three vital themes we should include:

Responsible buying

Where we spend money impacts communities, sustainability, and society. It is therefore vital to understand our supplier markets. And take responsibility for making ethical decisions on spend.

Are we enabling access for disabled people in our supply chain? What impact are we having on racism? How can we reduce our CO2 emissions? These are the questions we are increasingly asking ourselves. And rightly so.

Reporting savings remains important (of course!) But the future of procurement requires a 360-degree model of value measurement. What are your impacts on sustainability, diversity, your company brand, and your clients’ work?

We are here to make a difference.

Relationships and networks

In the midst of constant volatility and change, relationships are the glue that binds us. They are also the key to innovation. This is why I am spending more and more time learning about our partners. And collaborating with all our stakeholders - both internal and external business partners. Sometimes even customers.

Much of this relationship-building is soft-skill-based. It is emotional. A lot of future innovation will come from small and diverse enterprises. We need to meet them on a peer-to-peer basis, avoid power plays, and earn trust. This will enable us to leverage innovation for our competitive advantage.

These relationships will need our procurement systems to be agile. We must accept the way they operate. You can’t impose a large company’s processes and logic on them. You can’t impose a 70-page contract on a small company when they don’t have a legal department. You need to accept reverse mentoring and adapt the way you operate. The same applies to payment terms. We must be aware of the differences in refinancing models. And accept them.

These relationships will also increase trust in the availability of data. This brings me to the next crucial theme.

Visualising and executing on data

Constantly changing regulations and governmental requirements have led to the build-up of complex layers within our procurement processes. And much of the time we are merely responding to those changes. We are not asking ourselves if they allow us to eliminate something. This leaves execution gaps.

Process mining and real-time data analysis bring visibility to end-to-end processes. And that is valuable. It allows us to ask questions. Where can I streamline to release funds that can be used for something productive? Something that creates the right value, and the right competitiveness?

At Accenture, we have delivered $35 million in cash flow optimization in a year by using process mining. Cutting process times by 50%.

Data allows us to drive, and data allows us to anticipate. And this is another critical change in logic moving forward. I'm no longer a fan of analysing historical data. I'm a fan of future data management and procurement decisions. Nobody wants to talk about how it was. Everybody wants to know what the decision is doing for the future. This is why data analytics is so crucial to our Book of Procurement.

By optimising process execution, we can achieve three key results. We can maximise supplier reliability, optimise spend, and improve productivity.

With this power at our fingertips, procurement is of super-strategic value to organisations. We need to rewrite our book, pull up a seat at the top table, and drive competitiveness.