What Lies Ahead for Procurement Innovation?
The unprecedented challenges of 2020 appear likely to carry over well into the future. Not only do companies need to be focused on health and safety concerns, but they also will continue to face challenges like managing remote work, building supply chain resiliency and handling budget pressures. Yet in tackling these types of issues, organizations still have opportunities to spur innovation within and from procurement.
Some of the areas where we see the most potential for procurement innovation include:
Building Out Supply Chains
In 2020, many organizations faced supply chain disruptions, such as with some vendors being unable to keep up with demand or with shipping delays. Even if these issues do not appear as much after the pandemic ends, they can still occur in the future. And new, unknown supply chain risks can present themselves at any time.
As such, one of the ways that procurement teams might reduce risk is to onboard new suppliers so that there can be more contingency plans in place. Top-performing organizations are “seven times more likely to slightly expand their overall supply base in response to supply-side vulnerabilities,” finds Deloitte.
In addition to potentially reducing risk, building out supply chains more can also unlock other opportunities. For example, a company might add suppliers in new markets to reduce the risk of vendors in a certain region being unable to meet demand, such as because of geopolitical or weather-related delays. These new suppliers might then help companies gain a better understanding of new markets, creating opportunities to launch products and services in these new areas.
Outsourcing Some Procurement Activities
Some procurement teams or companies without procurement departments simply have too much on their plates to handle everything internally. That’s why the future could involve more outsourcing of procurement tasks, whether that’s to onboard new suppliers for building out supply chains or to request bids for certain products and services.
By outsourcing some procurement activities, staff can have more time to focus on more strategic areas that spur innovation. And outsourcing partners themselves may be able to boost innovation through their own expertise and technology. For example, GoProcure’s Buyer’s Desk includes a team of experienced supply chain professionals who can use their knowledge to suggest strategic ways to build out supply chains and increase operational efficiency.
Increasing Supplier Diversity
A growing and important trend within procurement is to develop supplier diversity programs. Increasing supplier diversity, such as through the help of our Buyer’s Desk, can lead to innovation in many ways.
For one, searching for diverse suppliers can expand your company’s typical vendor network. That means you may be exposed to new ideas and new ways of working that you can implement in your own business. Similarly, if you’re procuring customer-facing products, diverse vendors may offer goods that you haven’t come across in the past but which would appeal to your customers.
Increasing supplier diversity can also spur innovation among employees. Many employees want to work for companies that have a positive social impact, and supplier diversity programs can inspire related efforts across companies. For example, as employees engage with supplier diversity efforts, they may also decide to engage with organizations working with underserved communities. Doing so could boost employee experience, improve a company’s reputation and more.
Spend Data Analysis
Another area that’s ripe for innovation is how companies utilize spend data. Many organizations struggle to even track spend data, so the use of e-procurement or spend management platforms to get a handle on purchasing is important in these cases. From there, companies can benefit from diving deeper into spend data analysis.
Knowing how you’re tracking against budget can be helpful, but it’s possible to dive deeper. For example, analyzing spend data patterns might reveal issues like certain departments letting costs creep up due to a lack of proper approval workflows. Or, spend data analysis might help companies realize how they can save money, such as by grouping certain purchases together at one time to obtain bulk rates.
Spend data analysis can also help companies innovate in terms of the ways they work. If spend data shows that, say, your remote employees tend to incur fewer expenses than your in-office staff, that might be a case for making remote work more of a permanent option.
Connected to areas like spend data analysis and outsourcing is the emphasis on procurement efficiency. In many cases, this means digitizing and automating areas of procurement so that employees do not have to get bogged down in time-consuming, manual processes. Top-performing organizations are “twice as likely to prioritize digitization,” according to Deloitte.
The areas in need of efficiency can differ among organizations, so it’s useful to take stock of your processes and consider what areas are slowing you down. For some, that might mean areas like invoice management and payments need to be streamlined. If your procurement and finance teams are spending a lot of time handling expense reports, trying to match purchase orders, cutting checks, etc., then that could be taking away from time they could be spending helping companies move forward with new ideas.
So, utilizing digital tools like a spend management platform that can automate vendor payments could free up time to focus more on innovation. Working with partners like GoProcure’s sister company, Metasys Technologies, can also help streamline processes and improve overall procurement efficiency. Companies can then potentially apply some of these ways of working to other parts of the business.
Ready to Improve Procurement?
Focusing on these areas of procurement can help your organization in many ways, such as by finding cost savings, reducing risk and freeing up employees’ time to focus on more valuable areas.
Working with the right partner to improve procurement and spur innovation is critical. GoProcure’s combination of technology and expertise can go a long way toward enhancing your procurement activities.
Want to learn more how to more effectively tackle procurement challenges? Request a meeting with our experts today.