Solutions to Seven Challenges that Procurement Should Not Ignore
How does Procurement overcome the key challenges of enhancing the level of stakeholder engagement, maintain effective visibility of spend and manage a more cost-efficient procurement function? These are some of the current issues that are relevant when managing complex procurement categories, according to a series of RoundTable discussions hosted by Graham Crawshaw of CASME at ProcureCon Europe.
1. Recruiting Future Talent
Procurement professionals need to represent the profession at careers fairs and place a greater emphasis on selling the function to the attendees; this is because as a discipline, procurement is not generally covered during school and does not feature as a potential job for most people.
Tempting compensation packages are not the only important factor; the aim should be to create a unique culture for Procurement. Although the use of an internal network is certainly important for attracting talent, to entice the best people, external recruitment agencies can yield good results if provided with clearly defined expertise requirements and job roles.
2. Planning Corporate Travel
According to delegates discussing these issues at ProcureCon Europe, a future decline in corporate travel expenditure is anticipated. This is due to smarter approaches to travel bookings and the widespread adoption of meeting technologies such as high-definition video conferencing. Apps will be developed to enhance their integration with other apps. Travel management company apps will also synchronise with Outlook calendars and predict the optimum times for booking flights and hotels for forthcoming events. Ultimately, these processes will become fully automated to achieve the lowest possible cost.
3. Managing the Contingent Workforce
Managing and sourcing a contingent workforce is a highly complex activity, especially when it involves cross-border hiring. It is therefore necessary to implement flexible processes within the programme. Given the principal need for visibility, Procurement needs to ensure there is executive sponsorship. Global implementation may require local adjustments to comply with the different rules and regulations of each territory.
4. Monitoring Tail Spend
Managing tail spend can be a tremendous challenge. Start by understanding and gaining visibility into the high-volume, low-spend areas. Use the data available to influence the behaviours of stakeholders and initiate cultural change, enabling Procurement to manage more of the purchasing activities across the organisation.
5. Delivering Automated Data Analytics
The challenge for Procurement is to look beyond Excel and use tools to visualise and gain greater data insights. To start the process, a clear objective needs to be defined regarding the processing of data. The amount of manual intervention must be reduced, and reports should help the decision-making process rather than simply provide the data itself.
6. Strengthening Negotiations
Stakeholder engagement is critical both before and after contracts are implemented. Procurement therefore needs to develop ongoing relationships rather than ad hoc communication when a specific task or support is required. Ideally, stakeholders should recognise Procurement as being able to coach the organisation through the buying process. To be more effective, category managers need to be trained and practiced in ‘soft’ negotiation skills such as listening and applying emotional intelligence.
7. Controlling CapEx
Cross-functional teams, transparency of data and early involvement in projects all help to manage this high-spend category. By establishing these, Procurement can add more value and become recognised as a trusted advisor.
This article was originally published in Supply Management.