Why procurement is key to competitive advantage
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Why procurement is key to competitive advantage

Stephen Simko

Global Procurement Service Line Leader



I recently hosted an interesting roundtable discussion with 10 procurement leaders from high-profile organizations across manufacturing, tech, aerospace, insurance, and healthcare.

Although the participants came from a wide range of industries, they face many of the same issues, as we all continue to adapt to COVID-19 and other trade disruptors.

Our discussions led to a consensus on some overarching pain points, best practices, and areas where procurement can give your organization a real edge over its competitors. Here are some of the experiences and insights we shared.

New value and opportunity in procurement

Procurement teams continue to grapple with supply chain risks, tightening margins, and other significant impacts of COVID-19. But amid increasing demand and chasing parts, procurement has a new opportunity to shine. No longer taken for granted, procurement has a vital role in senior-level discussions. Now that we have a new seat at the table, we should work to stay there. We can change the narrative to position procurement not just as a way to save money during hard times, but as a value-add partner. For example, consider how we develop stable relationships with suppliers to boost long-term organizational resilience.

During the pandemic, we've also sharpened our skills to meet future shocks with flexibility. The group agreed that we now know how to scale back at short notice and which expenses are truly business-critical. The companies that retain this nimbleness in the face of sudden change will be best positioned to thrive.

Better alignment with suppliers to ensure success moving forward

The group traded stories about how their relationships with suppliers changed – in many cases quite dramatically – during the pandemic. Procurement leaders need to balance today's uncertain demand with long-term supply commitments, all while customers want increased speed to market. Meanwhile, as they try to manage skyrocketing requests, some suppliers have streamlined and simplified their process for escalation.

During this period of rapid change, some companies have found value in incorporating more collaboration into their supplier relationships. They've focused on becoming their suppliers' customer of choice, worked to gain their trust, and learned from their specialized knowledge. Companies have asked their suppliers for multi-tier transparency, but in return, they've also provided more information to help the suppliers with their own forecasting.

That enhanced collaboration and partnership helps both sides. It's easier for suppliers to grow their business with a current client than find a new one. And when you're a supplier's customer of choice, they will be more inclined to bring their latest innovations to you to help you stay competitive.

The battle for talent

Competition for attracting and retaining talent is a major concern in procurement across industries. It has an impact on full-time and contingent employees, as well as third-party services and suppliers.

Employees are asking their companies for flexibility in ways they've never offered before, but this must balance against maintaining productivity. Organizations also need to find the ideal balance of in-house expertise versus outsourcing. In many cases, companies are now competing for talent with industries they've never competed with before, such as retail. They're under tremendous pressure to be employers of choice to snap up the best candidates.

One way to address the talent shortage is to look for different skills and experience. For example, applicants with advanced gaming skills may offer a fresh perspective on your procurement puzzle because they know how to maximize the assets they have to get the best results. Procurement teams can also look to bots to help with tasks such as acknowledging purchase orders.

Adapting to COVID-19's long-term effects on work and travel

When attempting to predict future procurement trends, too many question marks remain. Our budget forecasting can't go as far out as it used to. Discretionary items are still being cut. And there's increased opportunity for more digital disruption in industries such as insurance.

Over the next 6–12 months, I expect challenges with lead times for materials, inflation, labor shortages, and capacity issues. Vaccine mandates have brought a level of politicization into the workplace and complicated client visits. Though some companies allow or even encourage travel, it's generally very limited and requires additional approval. Business travel probably won't go back to what it was but could find a middle ground.

The same may hold true for virtual versus in-person workplaces. As companies try to make sure they have all the right people in all the right places while maintaining a dynamic corporate culture, many may land on a hybrid model.

As new risks arise and keep everyone on their toes, consistent communication and a flexible strategy is your best solution for using procurement to gain a competitive advantage.

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