The Modern Procurement Partnership
Over the past 20 years, everything has changed in the way people think about buying goods and services. Digital transformation, once a leading-edge business notion, is now synonymous with the modern online marketplace. With this shift in technology and information-enabled buying, there has never been a more important time for information technology to be a strategic partner to procurement.
In order to understand why the relationship between information technology and procurement is so valuable, it’s first necessary to define the modern procurement function. While each organization will have its own mission, vision, and goals for the procurement function that are specific to its individual needs there are some common principles to the practice of procurement. Like the first principles of physics in science, these procurement principles help practitioners define the way we think about our impact to the business, and serve as a guiding light when establishing all policies, practices, and systems.
These principles are:
1. Locality. For a great user experience in buying, technology must meet the users where they are. It must offer an intuitive, consumer-like experience, presenting needed products and services from suppliers within timely geographic access.
2. Causality. Business need drives procurement activity. When a user needs to obtain a good or service, they are doing so to solve a business problem. Procurement technology exists to operate as a service to the user and an extension of their team to quickly and reliably meet that need.
3. Invariance. When a user follows a curated buying path, the user must receive the invisible benefits of procurement practices: reliable sources of supply from suppliers that reflect shared company values, offering goods at market competitive rates, with timely delivery in line with modern expectations.
4. Asymmetry. A procurement method is only as valuable as its usage allows. If the 'better, faster, cheaper' manner to obtain goods and services is the compliant path, then compliant buying is also the easiest. Good experiences drive good policy behaviors, which in turn drive more good experiences in buying. Curated and non-curated buying channels offer different speed, precision, and control.
5. Probability. Very few questions rise to the level of enterprise procurement that have a definitive binary answer. Most issues in reliable, responsible, cost-effect supply come with a range of probabilities for their likelihood and severity. Procurement must operate in a steady state of balance, neither being so risk averse to add unnecessary cost and bureaucracy, nor so cavalier that disruptions can undermine the ability of the business to meet its commitments.
From these five principles, every procurement strategy and approach can be derived, whether that is how to manage commodity buying, how to execute a supplier relationship management strategy, how deliver contract lifecycle management, where to prioritize environmental and social governance efforts, and how to develop shared business goals.
While each organization will have its own mission, vision, and goals for the procurement function that are specific to its individual needs there are some common principles to the practice of procurement
These are however, only a starting point for those efforts, and it’s here that enormous value for procurement can be provided by information technology thought leaders. From its unique position in the business, information technology can be a reciprocal business partner and trusted advisor to procurement, offering five essential pillars of support.
1. Strategy. Help us design end to end. There is a strong tendency to provide spot solutions to business problems; to look at the component parts of a procurement workflow and solve each step individually, rather than step back and design a global solution with targeted implementation.
2. Advocacy. Place procurement in your business goals. Every investment in procurement as a function can be made only with a business case that helps to reduce cost, understand and mitigate risk, and reduce unnecessary complexity in execution. Only when there are shared business goals and mutual advocacy can transformative efforts in this space take shape.
3. Priority. Keep cost and risk above the fold. A business does not grow by procurement alone. However, innovation in procurement does materially contribute to the bottom line and can drive the best value per dollar earned. Help is needed to prevent procurement initiatives from regularly reprioritization.
4. Transparency. Provide substantive to data and business partners. From its special position in the business, technology leaders can help procurement open doors to supporting other areas of the business with procurement practices, and drive awareness of opportunities.
5. Execution. Help deliver the live service. Information technology services touch every user of the modern workplace, onsite, offsite, any time. As the enabler of technology services, the function has a shared responsibility to help users connect with content and triage them to the right services to meet their needs. From its years of experience in this area, it is uniquely prepared to teach modern, always on digital procurement the art of live services.
The modern partnership between information technology and procurement has the potential to drive enormous strategic value, reducing costs and risks. Through this partnership, we can meet the users where they are, connect them to the services that offer innovative solutions to their business needs, and leverage technology to operate with incredible speed and precision.