Effective supplier relationship management continues to be a top priority for procurement professionals. These three critical dimensions emerged during discussions.
Risk Management: Supply chain disruptions can come in many forms, from climate change to political unrest to cybersecurity threats. With global uncertainties on the rise, managing supplier risk is imperative. Procurement teams are increasingly focusing on strategies to proactively mitigate that risk, rather than just react to unforeseen supply chain disruptions.
Diversity: Promoting supplier diversity is both a social responsibility and a strategic advantage. Organizations are actively seeking ways to increase supplier diversity, fostering innovation and resilience in their supply chains through technology and process improvements. Many procurement professionals that came to our booth indicated they had very high supplier diversity targets they were looking to achieve in the next few years. One organization told us they want to be at least 80 percent diverse suppliers within the next few years.
Standardization and Compliance: Achieving consistency in processes, quality, and contractual terms is crucial. While ‘standardization and compliance’ is a broad term, many speakers at the conference emphasized the need to be more specific in addressing these issues with our suppliers and partners.
CCP Global’s associate partner, Wende Burgess, spoke extensively on this topic during her panel discussion: Streamlining the Process: Making Life Easier for Stakeholders, Suppliers, and Procurement. She stressed the importance of bringing risk to the forefront of onboarding in order to proactively facilitate compliance with your supplier policies and eliminate unexpected complications on the back end.
In today’s uncertain economic climate, procurement departments are challenged to deliver value while working within constrained budgets. Here are some trends we noticed in this area.
Scaling Down: Larger projects are being put on hold due to economic uncertainty. Procurement teams are adopting a wait-and-see approach, focusing on flexibility and adaptability in their strategies.
Targeted Small Projects: Instead of embarking on large, expensive initiatives, organizations are finding success by focusing on smaller projects with significant impacts. This approach allows them to adapt to changing circumstances and technical advances more effectively, without a huge outlay in time and money.
Cost Reduction Strategies: From renegotiating supplier contracts to stretching project funding over a longer timeline, procurement professionals are seeking ways to cut costs without cutting quality or falling behind the technology. This may also include targeted process improvements to allow organizations to find cost savings in their current processes to stretch the resources they already have.
This is both an internal and external shift. The role of procurement has always been to partner with internal customers in the category they manage, but the toughest part was the viability of that relationship. A big shift seems to be underway to better align and insert procurement into those internal customers’ organizations to truly create an alliance once and for all.
External Partnerships: ProcureCon conferences are a great example of the external emphasis on creating and leveraging partnerships and peer knowledge in the procurement industry, as are organizations such as ACSPE and The Art of Procurement – both of whom were attendees at the conference.
Internal Partnerships: There is a significant trend toward fostering partnerships within the organization. Procurement teams are actively creating strategies for internal collaboration, aligning their efforts with other departments’ goals.
Title Shift: The titles of procurement team members are reflecting this shift, with many leaning towards terms that include the word “partner” to signify their focus on synergies and compliance. For example, we noticed several instances of titles that were changing from “Category Manager” to “Category Execution Partner”. This reflects the fact that, while you’re managing a category, you’re managing it for the internal stakeholders that are utilizing that category to provide a value-added service for those stakeholders.
While technological solutions promise increased efficiency and effectiveness, they also present unique challenges.
Change Management: Insufficient change management processes result in user adoption challenges across many technology solutions. Successful implementations require a comprehensive approach that considers the human element from the very beginning.
Data Quality: Maintaining clean and accurate data is an ongoing challenge. Procurement professionals recognize the importance of data integrity in decision-making, but don’t always know how to make that happen.
Proactive data quality was another topic covered by our Associate Partner during her panel discussion. Participants appreciated her reference to migrating only useful data during implementations. Or, as she put it, “Why are you paying me to migrate a supplier you haven’t used in 10 years?”
Ongoing Support: Qualified and stable support is essential for the continuous improvement of technological solutions. Organizations are investing in more robust support systems and partners to address issues promptly and ensure optimal performance.
The current economic climate, high turnover rates, and changing attitudes toward office work have led to staffing shortages everywhere. Procurement departments are no exception.
Hiring Challenges: Budget constraints and a focus on cost savings have delayed or even prevented new hires due to hiring freezes. Procurement professionals are exploring various staff augmentation solutions to bridge the gap temporarily.
Meeting Goals with Limited Resources: Due to the uncertain economy and high turnover, companies are feeling the pressure to meet goals with smaller teams. This is where leveraging process improvement is key to ensure you are utilizing your resources to the best of their capabilities.
Turnover: Since companies are working on doing more with less, many employees may feel the crunch and be more apt to move to an organization where they aren’t feeling as much pressure. When these employees leave, they may be taking with them a large knowledge base that can’t be immediately replaced internally. This is where short-term staff augmentation may be a good fit to ensure continuity within the organization.
ProcureCon Indirect East 2023 illuminated critical insights that are shaping the landscape of procurement today. These key takeaways underscore the ways in which companies are trying to proactively deal with avoiding risk while better diversifying their supply chain.
At the same time, the more mundane issues of user adoption and efficient processes and spend are still ongoing challenges. In that respect, the benefits of creating valuable external and internal partnerships to share our knowledge and experience is crucial to keep at the forefront during these times of economic uncertainty.
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