Procurement function 'must become entrepreneurial'

16 April 2019

Delegates at the Ivalua Now: The Art of Procurement event in Paris last week were told procurement departments will have to become entrepreneurial to meet the future demands of the profession.

Natacha Tréhan, professor in purchasing management at the University of Grenoble Alpes said that contributing to the reinvention of company business models is the main challenge facing procurement.

Financial performance, risk management and value creation have been traditional procurement missions but to truly create value in future, “the procurement function must become an entrepreneurial function,” she said.

This includes propelling businesses forward when it comes to key issues such as sustainability, the academic told delegates.

“Being an entrepreneur doesn't mean only being compliant with CSR obligation. As an entrepreneur, you can make proposals to help your company meet those objectives," she said.

“Non-financial reporting is an obligation for listed companies but tomorrow it will also be an obligation for unlisted companies so we need to be ready. You need to know the indexes and organisations that rate your company.”

Tréhan also argued for greater collaboration, with collaborative platforms providing opportunities to improve return on investment.

“If you have underutilised assets or excess inventory, you could exchange them on a collaborative platform for media, advertising or transportation,” she explained.

And the way procurement teams work with suppliers needs to evolve, according to Tréhan. 

“In the future, you will have to deal more and more with hybrid suppliers who are at the same time your competitor or even your customer because digital technologies are transforming the way we work," she said.

“Coopetition, fusing cooperation and competition will be a challenge for procurement. You no longer choose best in class suppliers, they choose you. Instead of just managing suppliers, you will have to motivate suppliers.”

She outlined a scenario where businesses could choose to enter into local symbiosis, citing the example of a number of companies in Kalundborg, Denmark which use a circular approach to production with residue from one company becoming a resource at another.

Other future trends include communicating with suppliers using natural language processing technology, as "digital technologies are contributing to a shift in the procurement mission," she predicted.

“Predictive analytics will be able to give guidance on sourcing decisions using machine-learning. Source-to-pay will be fully automated and we'll be able to provide self-service procurement with the help of chatbots," Tréhan said.

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