Reinvent procurement as a value function, buyers told

Buyers have been told to reinvent procurement as a value organisation led by a “chief value officer”.

Justin Sadler-Smith, head of UK and Ireland Ariba Cloud procurement at SAP, talked to delegates at Procurious’ Big Ideas Summit 2019 about revolutionising the procurement model through a focus on the wider value proposition.

Procurement professionals need to lead a value-driven organisation by making marginal changes to reorganise the organisational structure and bring in more efficient processes that lead to successful transformation, according to Sadler-Smith.

Value mindset

The new focus is on value functions and the roles procurement professionals are taking on that go beyond the traditional buyer role, such as sustainability ambassador. 

Sadler-Smith said: “What about procurement and the function of value leading the change? Look at areas where we can start making a difference around the organisational structure and move people into the added value strategic activities and away from the transactional view.”

New processes are being developed and instigated through close supplier collaboration and by putting value functions, such as sustainability and innovation, at the forefront of operations.  

Sadler-Smith said: “Risk mitigation, driving innovation, adding shareholder value, proving the quality of service to public services, all of these things, I would say there’s a very real need to look at procurement and reinvent procurement into a value organisation with a chief value officer.”

Other marginal gains can be found by identifying supplier innovation, finding purpose beyond risk mitigation and sustainability, and attracting and retaining procurement talent.

“The best source of innovation is spending more time with your supplier base and driving closer collaboration and exchange of information,” Sadler-Smith said.

Capabilities to fast-track processes

Sadler-Smith focused on the opportunities that data and technology bring and how this frees up time to develop relationships with suppliers and the company’s value proposition. With less time to react to all the supply chain  issues that procurement professionals need to deal with, advanced, structured data is key to keeping operations on track.

Sadler-Smith asked delegates if their companies were keeping up to date with modernised software and processes. “Look at the procurement processes and ask does that give me time to react, are they organised and engineered to the point where this process means I can do something quickly and be able to respond effectively?”

He added: “We can’t make that change if we’re doing exactly what we’re doing today, we have to invent ourselves as professionals and you can’t do that without making sure you have lots of data.”

Find marginal gains through improved data capabilities which cut out manual processes, stop duplicating effort and allow people to move to the more strategic roles. This will equip companies with a more efficient operations model, according to Sadler-Smith.

Drive productivity by looking at areas of automation and adopt easier and faster processes in areas such as managing contracts, creating a catalogue, and category structure.

However, Sadler-Smith highlighted the importance of taking a holistic view. Transparent end-to-end data ensures an accurate picture of the supply chain and enables marginal gains to be identified more easily. “This is absolutely a lifeblood to drive the change that procurement needs to deliver,” he said.

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