Five things keeping procurement directors up at night

Dave Emsley, head of public sector tail spend services at OT Group, takes a look at how business leaders can develop strategic plans in five key areas to improve procurement processes

Procurement directors across the globe are tired of being told how they’re continuing to navigate unprecedented waters, that the world of work has changed for good, and that business leaders must innovate to turn a challenge into an opportunity – they know all too well the day-to-day struggles their teams are now facing.

Yet, while organisations are trying to ‘build back better’ this presents an important opportunity to re-evaluate where there is the potential to add value – particularly when it comes to the common workplace headaches keeping specialists up at night.

Gone are the days when workplace supplies were purchased in large volumes through established frameworks. Now, the hunt for more ad-hoc or unusual products has the potential to represent hours of lost time searching and negotiating with hundreds of suppliers – each ‘promising’ varying degrees of quality, customer service, and price guarantees.

As a result, procurement teams are finding themselves overwhelmed with the sheer volume of enquiries they are receiving from across the business, battling to resolve mismatched PO lines, caught up in a raft of freight and logistics challenges – all while tackling the ongoing challenges of maverick spending.

And that’s before they begin to consider the need for sustainable decision-making which is rising rapidly on the procurement agenda.

Yet, the need to collate paperwork, invoices, and statistics from hundreds of suppliers to create just one report for a C-suite meeting isn’t getting any easier. That’s why it’s important for procurement leaders to take stock, and seek the right opportunity to regain budget control, improve procurement processes, and develop strategic plans – particularly in five key areas.

1. Technology and digital transformation

The extent to which technology can ease the pressures currently being experienced by businesses is almost beyond definition.

From the implementation of automation-led processes that guide the right person to do the right thing at the right time, to the introduction of cloud-based communications that connect colleagues and their clientele irrespective of location, the power of modern tech has never been so great.

Visibility around cost centres, product categories, and contract analysis, coupled with raw data, at-a-glance charts, and deep dives must be possible in only a couple of clicks. With such a wealth of information ‘locked inside’ every organisation, each thread of data should be harnessed to inform decision making when it matters the most.

2. Supply chain consolidation

In today’s market for procurement and supply management, less is certainly proving to be more as organisations look to streamline their services and create a truly efficient, customer-centric experience.

Traditionally, there was a temptation to seek out specialists in each field – as we all quite rightly aspire to work with ‘best of breed’ providers. However, the flip side is that this approach quickly results in a disparate supply chain fraught with risk.

This goes some way to explaining why marketplaces if trusted, are becoming increasingly popular. Going to a partner who has already done the hard work from a sourcing perspective and can provide access to a wealth of choice – not least in terms of price – and  presents a multitude of benefits.

Take that one step further, and by implementing an easy to use, intuitive procurement system, organisations significantly improve productivity by freeing time for core, revenue-generating tasks and providing a consistent business focus – while simultaneously taking back control of costs and eliminating rogue spending and budget leakage.

3. Tail spend management

Low value spend is often unmanaged within organisations, not least because it doesn’t neatly sit into any defined procurement categories. But these unclassified transactions – which typically make up 20% of spend – often account for 80% of an organisation’s suppliers.

The better management of tail end spending may feel like a luxury for a small business, but often the ROI that can be achieved from supply chain savings and the prevention of budget leakage, means the exercise soon pays for itself.

With smarter tail-end spend management and procurement processes, inevitably comes a desire to build trusted relationships with suppliers – even for products and services which were previously dismissed as low value.

This is crucial to businesses being able to attend to their core operations and run their organisation, without valuable resources being bogged down in the minutiae of administration and growth-limiting tasks.

If you didn’t catch the announcement last year, OT Group has been named as one of only two suppliers on Crown Commercial Service’s ‘first of its kind’ digital solution – which aims to simplify the supply chain, consolidate deliveries, and provide complete financial oversight for public and third sector customers.

4. Sustainability

Let’s face it, sustainable business practices are no longer a ‘nice to have’.

There are two distinct routes on the path to achieving the net-zero target, and in truth, a combination of both is key to progress. One method is to actively remove the gases that have already been created, and the other is to reduce the amount of greenhouse gas produced in the first place – prevention rather than cure option.

In the supply chain industry, advancements, therefore, include a switch to a more ecologically friendly electric fleet, savvy delivery options for a geographically fragmented workforce, and the reduction of ‘waste’ at the source.

There has been a surge in the number of companies – large and small – relying on business intelligence more than ever, too. Such data analysis isn’t just great for tail spend management but can help to identify trends that may otherwise remain untapped. And often these don’t just protect, they safeguard the environment too.

But it’s not just businesses that can make a difference. If products and services can be designed with the environment in mind, this is one of the best ways to prevent the unnecessary creation of waste. As we enter 2022, sourcing managers should be looking for eco-credentials during the tender process.

5. Hybrid and remote working

‘The death of the office’ might be a phrase many are ready to commit to room 101 – but there’s no denying that we’re entering a new era of work. And, no matter where colleagues choose to carry out their duties, it’s important they are able to access all the tools, software, and solutions they may need.

Yet, a remote workforce can create hidden costs – particularly when it comes to the procurement of business supplies. While many organisations have implemented a raft of processes to curtail maverick spending, to be ‘belt and braces’ it’s worth seeking out procurement software that empowers remote workers to ‘self-serve’ when they need to make purchasing decisions around their satellite offices.

With budget control and transparency front-and-centre, business guest checkout functions enable firms to set up every employee as a home user, allowing them to buy pre-approved products and services from the usual business account.

By keeping a firm hold on the reins and supply chain – and enabling staff to access everything they need, exactly when they need it, and get it delivered straight to their door – workers will never be temporarily out of pocket either, which supports the duty of care as an employer.

Please note: This is a commercial profile

© 2019. This work is licensed under CC-BY-NC-ND.