By Dennis Bouley
In the changing world of procurement, the boardroom is not the only influencer that is pushing the Chief Procurement Officer’s (CPO) agenda. Other factors like globalization, supply chain dynamics, more rapid trade, and a flood of new technologies all contribute to the whirlwind of variables that must be managed.
In order to achieve success and create value in such an environment, CPOs are reinventing how procurement teams are staffed and operated. More talent from both within and outside of the supply chain is being brought in. These are individuals who are cross-functional in their discipline, and who can combine value engineering functions with a deep understanding of product design and innovation. They focus on risk and strategic elements more so than mundane, repetitive operational tasks. They are masters at linking commercial strategy with procurement strategy. Over time, CPOs and their staffs have evolved from administrators to buyers and then on to being product sourcers and planners. Now, risk and supplier relationship management are emerging as the critical tasks for these procurement teams.
Over the last 15 years, Jim Wetekamp, CEO of the strategic procurement technology firm BravoSolution (http://bravosolution.us/), has witnessed all of these changes and much more. “Now CPOs and their staffs are supporting innovation and minimizing risk. They are placing their companies in a position of greater agility as changes in product lines, geographies, market complexity, category complexity, and strategic constraints influence their industry,” he said.
“Procurement teams are asking us as tool providers to help them automate more and more of their core procurement processes. In the past, tools were separate. Marketing had a sourcing tool of its own, direct materials operated out of ERP systems, MRO might have been performed by a third party. Now customers want us to support more and more of these processes in a single solution. They want a 360- degree perspective of their suppliers, and categories and all of the business processes that are impacted,” he said.
New tools to help manage the information explosion
Visibility, transparency, analytics. These are the prerequisites required in order for procurement to play a proactive role in supporting their organizations. Visibility is needed across as many suppliers and categories as possible so that overlaps in spending can be avoided. Information such as who the suppliers are, where they work, what are their certifications, when is their contract up for renewal, when is their next assessment, and who is working with them needs to be assimilated. It makes complete sense to have all of that information in one place supported by a centralized tool.
New trends such as the Internet of Things (IoT) are adding to the amount of information that must be gathered, parsed, analyzed and put to both tactical and strategic use. According to the IHS Markit research firm, the number of connected Internet of Things (IoT) devices is expected reach 20 billion this year.
“We are far more interconnected and integrated,” says Wetekamp. “A ton of data and indicators are now coming into procurement departments. All of that information needs to be funneled down to something that can be used to influence your next decision. That’s the art or technique of how to apply the magic of big data to procurement,” he said.
“What you need to manage all of that is an effective filter. You also need a lens with which to analyze all of that information. Determining what’s important and what’s not important is critical. And you need to know how that information maps into your strategies,” he said.
“We help our customers create an ecosystem that doesn’t replicate all of those millions of information pieces that are coming in. Our centralized solution makes sure the information is appropriately channeled, filtered and reflected to help a procurement manager make better decisions,” he said.
BravoSolution (http://bravosolution.us/) helps more than 650 companies and 150,000 purchasing professionals worldwide unlock the power of procurement to drive financial performance, build procurement organizational excellence, manage risk, and influence innovation. BravoSolution has direct operations in 18 offices located in 12 countries across 4 continents, employing more than 650 procurement experts.
Dennis Bouley is Editorial Director of MyPurchasingCenter.com and special advisor to MediaSolve Group, a strategic B2B marketing services firm focused on helping companies and institutions leverage the web and social media to achieve business goals. He spent 18 years at Schneider Electric as Managing Editor of Global Publications, and was responsible for cross-division management of the corporation’s white paper and customer success story processes. Prior to that, he spent 10 years working for IBM managing both small and large accounts. He holds a Bachelor of Arts in Journalism from the University of Rhode Island and holds a Certificat Annuel from the Sorbonne in Paris, France.
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