Changing trends in today's procurement
Today's dramatically changing business environment highlights the strategic importance of procurement. Until recently, procurement was a necessary, but seldom celebrated, component. But now-a-days, procurement function is playing a pivotal role in the organization's success as supplies of critical commodities have tightened and prices have risen.
Procurement is now undergoing transformation as a function in itself. Age old, traditional and rudimentary concepts have shifted towards a more open, innovative and flexible focus. Expectations have also undergone a change. Companies are looking for procurement related services not just to fulfill their requirements at the lowest cost but also to enable them to manage risk, meet legislative requirements and tackle the challenges posed by globalization and scarcity of supplies. Simultaneously they are also working towards meeting the important day-to-day goals of finding and pre-qualifying suppliers, and ensuring data quality.
Procurement now actively contributes in board room discussions and is drawing increased attention from senior management. It is being treated as a true business partner and becoming more centralized and coordinated. The procurement function now gets involved early on in project related and strategic tasks. Procurement staff is becoming increasingly professional and advanced technology (tools and systems) is being used.
Adding value to the organization has become the priority area for procurement. It is not only all about the cost but about developing a strong commercial discipline, developing and maintaining strong and sustainable relationships with suppliers, internal and external customers, innovating, striving for continuous improvement, and firming up governance for long time success.
We as procurement persons are expected to do things that we didn't do before. Organizations expect the procurement function to think beyond cost cutting measures and start leveraging the talent that comes from procurement and expect them to think about the supplier market. As an extension of that towards supplier relationship side, we are being looked upon for building stronger supplier relationships. It's everything about speed and innovation these days. Just to start with it is important to have contracts rather partnerships in place and focus on governance and look at how we can ask suppliers to invest on organizations behalf , drive down the costs, and bring the best buy.
Considering the current scenario it will be imperative to say that we require more capability to do out of the box thinking to help the business go after the strategy and be successful. The idea that suppliers can add much value to the organization needs to be explored more so when lots of things are happening online and in social media.