In my last blog, I discussed the element of speed, a competency not typically associated with procurement, yet one that is becoming a more prominent requirement for internal procurement teams.
In today’s digital world, where market dynamics are always changing, CEOs are pressured to implement their visions and see results from their agendas more expediently than ever before. Often, they need to rely on suppliers to see things through. It stands to reason that they have less time and little patience for the unhurried pace at which procurement traditionally moves and are implementing changes to get more out of procurement.
This is not just speculation or assumption. In progressive companies across industries from financial to consumer products, we are seeing tangible evidence that this craving for speed is changing the way procurement interacts in the organization and where procurement leaders are teams are positioned in the organizational chart. For example:
- CPO Meet CEO:
We are seeing more examples of CPOs reporting directly to the CEO in industries where this reporting structure has rarely been seen. It’s early days, but just recently, two prominent companies with whom we work have undergone this reporting transformation. This new reporting dynamic will undoubtedly yield greater pressure on the CPO to deliver and do so with speed.
- Internal SLAs:
Service Level Agreements are commonplace in outsourcing arrangements. They are now becoming more prevalent internally within organizations that house large procurement functions. Delivery metrics related to speed and turnaround time are being incorporated into these agreements, requiring that procurement teams move faster.
- Goodbye RFI:
The months-long RFI process is getting either massively shortened or done away with altogether. Why? You guessed it – speed. Internal procurement leaders are expected to stay attuned to market trends and opportunities in real time by accessing data and relying more heavily on specialist supplier intelligence. There’s simply no time for extended information-gathering projects.
- Supplier Turnover
Across industries, but particularly in the banking sector, companies are supplier shopping, unafraid to unseat legacy suppliers in favor of smaller ones who are more nimble – perhaps more motivated – and can meet the needs of the organization with greater speed and agility.
- Getting Out of the Way
In an impressive feat of self-reflection and in recognition of its tendency to be a bottleneck, we are seeing procurement equip suppliers with the technology and skills to operate with greater independence. Procurement is still managing the sourcing process, but then moving out of the way once the supplier is sufficiently on- boarded to improve flow and efficiency.
- A New Tone
Finally, there is palpable change in the narrative around procurement. Once, senior management would ask, “How can procurement further reduce costs?” With more frequency, progressive companies are now seeing procurement as fuel for growth and asking teams to deliver faster, as a result. It’s an unquestionably refreshing new attitude and perspective.
In my next piece, we’ll look at what this means for the procurement function and the supply base. It is coming faster than we realize.