In a previous post, we saw that companies
should SEEk (Social, Environmental and Economic) Sustainable Performance by
getting the GRIP on it (Growth, Responsibility, Innovation, Productivity). This will only be possible if vendors are fully
part of this complex journey.
How could a more scientific Procurement function help? Does your company have the right SPIRit with its vendors?
Supply:
- Globalization and/or internationalization
will remain for a long while. And what is good for business generates a lot of
complexity and risks for many areas of the organization included for
Procurement associates who should pro-actively help the top management in such
strategic context (even without immediate savings) by quickly and efficiently
adapting and opening the supplier panel. In any new country or region, while the
organization is still often under construction, success is even more linked to
the performance of those new vendors. Creating open and collaborative
relationships with the key new suppliers is critical to success.
- Relocalization / reshoring for economic
reasons or pure commercial strategy will persist. Once again, when adjusting the supplier panel, Procurement
professionals can decide to be a) pro-active or b) re-active; they can choose to be
a) strategic or b) just a support function .
- Resilience of the supply chain (the
ability of the supply chain to overcome and/or continue to operate when a
significant impact happens) can create a competitive advantage in many sectors.
We all have in mind so many examples of serious disruptions linked to one
missing purchased product/component, or due to a failure of an external service
provision. Improved resilience is linked to deeper industry collaboration, strong
quality mgmt., better traceability
and robust mitigation of supply chain risks (especially mono sources of
supply).
- Transportation, warehousing and
distribution (W&D) business is going through a massive
transformation. With the boom of online
sales, more attention should be put on the industry of small parcels, and
ultra-personalized deliveries. Will Amazon ever use drones? They apparently
took it very seriously. If it is not the case for W&D, at least, drones
have already become a great source of productivity for many service provisions.
Drones can really help to reduce the TCO and will be a game changer in several
sectors. We should ask EasyJet that has already tested security checks of the
planes with drones.
Productivity:
Productivity:
Vendors can dramatically impact on productivity, margin and cash flow. Beyond
ensuring sustainable competitive prices and cost optimizations, Procurement has
a key role to play in sourcing and integrating the most capable suppliers
within the organization in order to improve the Total Cost of Ownership.
Procurement should be involved in all outsourcing business cases. Buyers should
improve their Lean Six Sigma skills to focus on process/continuous improvement
with the vendors and internal customers.
Innovation:
Innovation:
Procurement has a big responsibility in capturing and integrating the external
innovations coming from a wide supply network.
For this reason, Supply Relationship Management programs
have a bright future; it implies a big change of mindset in the vast majority
of organizations. I am happy to see several gurus revising the SRM approach and
referring to Collaborative Business Mgmt., Trading Relationship Mgmt., Vested
way, Return On Relationships etc... Setting up the proper relationships with
our suppliers is a key success factor for innovation. Aeronautics, automotive
sectors know a lot about it. In order to create a new and disruptive service,
Amazon and P&G had to set up a complex commercial relationship. We can’t no
longer see a clear distinction between vendor and customer as it has evolved to
a business alliance.
Breaking the traditional procurement mindset and processes, Crowdsourcing will give a big help. Many companies are in the process of testing
the approach. P&G, Mars have been far beyond in developing their own web
page dedicated to external innovation.
Circular
economy should emerge soon with massive impacts on our distribution
channels, production processes, supply chains and supplier panels.
Will Analytics soon become reality? While big
data is strongly growing in marketing and sales, there is still a good step to
take in Procurement. On a single click, will we get soon complete analysis of
past data and future trends? We could immediately analyze our company spend, a
supplier, a supply market, a specific value chain, any raw material and costs. We
could have predictive risk analysis, or CSR dashboards related to a specific
supply chain, etc...
Responsibility:
In many cases, our company is highly linked to vendors that have a huge responsibility and impact in term of conflicting materials and minerals. Sadly, too many people still die because of their work. Procurement really needs to check how vendors perform in term of working conditions, labor rights, Diversity & Inclusion, environment, corporate governance, corruption. In many firms, as a first step, CSR is linked to risk mgmt. and reputation. It is much better when CSR is part of the company strategy in order to bring value to final customers.
In many cases, our company is highly linked to vendors that have a huge responsibility and impact in term of conflicting materials and minerals. Sadly, too many people still die because of their work. Procurement really needs to check how vendors perform in term of working conditions, labor rights, Diversity & Inclusion, environment, corporate governance, corruption. In many firms, as a first step, CSR is linked to risk mgmt. and reputation. It is much better when CSR is part of the company strategy in order to bring value to final customers.
In order to SEEk sustainable performance and have the GRIP on it, does your company have the right SPIRit when managing and collaborating with its vendors? What are the key priorities of your Procurement
function to better support business and company performance?
