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How do your suppliers see you?
As hard-edged negotiators, who are looking for price and nothing else? Or relationship driven professionals, focused on improved visibility within the business and developing interdependent relationships within your supply base?
As a specialist in the procurement and supply chain market we’re aware that you want to be seen as the latter, but are your own tools, systems and processes working against you?
No focus on specialists
For example, we recently submitted a tender through an e-procurement portal that awarded us precisely zero marks for being procurement specialists. That means it doesn’t take into account the fact that we live and breathe the procurement and supply chain market on a daily basis, have an almost ludicrous amount of experience and know the sector inside out. Ultimately, it makes no sense.
What can be done?
A recent presentation by procurement digitalist, Bertrand Maltaverne made a salient point. Namely, that the procurement and supply chain functions can often hide behind technology, and forget that the industry is all about relationships with actual people. He suggested that if procurement wants to be taken seriously as a strategic function, then it needs to look at the value it adds and communicate it effectively.
We work with numerous firms and functions that do exactly this and recognise that the supply base can offer much more than price – but it certainly isn’t endemic.
But why not?
Nick Jenkinson, Senior Procurement Director at Astellas Pharma believes it’s because we aren’t focusing on 100% value creation. He recently spoke about how procurement functions often bring in top tier talent, but then allow them to undertake activities that are non-value add. Jenkinson added that if we want to reach the point of 100% value creation then the first thing we need to consider is how procurement creates value for the business.
Once you’ve identified this value proposition, then it’s purely about focusing on activities that support value creation – and removing those that don’t through automation. That way, the core function of procurement becomes value creation.
Technology will play an increasingly important role in the procurement functions of tomorrow. We’ve already seen robotic process automation, while cognitive procurement and artificial intelligence surely isn’t too far away. If what Jenkinson is proposing becomes reality then there should be real recognition of the value that procurement adds to the top and bottom lines of the business.
But, let’s not forget the human element. There’s only so much that can be automated and if suppliers have a deep specialism in a specific market then we need to make sure that the e-procurement system isn’t ignoring firms based on what it doesn’t understand. Because ultimately without the right talent, that vision of 100% value add will never become a reality.