Top 10 Things We Learned: Strategic Procurement
If we were forced to sum up all the things we learned at Consero in one sentence, it would be that procurement professionals are ready to step up in their organizations by becoming true partners with stakeholders.
The following ten takeaways break down precisely what that means and how procurement teams are working on branching out to add more value to their organizations. They also provide specifics on how stakeholders can collaborate more effectively with procurement to drive better outcomes for their organization.
1. “More than Just a PO”
In the procurement world, “PO” means purchase order (not post office). Today’s procurement professionals are sick and tired of being put into the “PO Box” figuratively and pragmatically — mainly, the question is, “how do we shift the perception from transactional to strategic?” Procurement teams want to and should be recognized as being able to do more than create and fulfill purchase orders.
Most importantly, today’s procurement leaders want to partner with their stakeholders, not an afterthought. Organizations often know this, but processes bog down resources and turn perceptions in the opposite direction. For example, we know the value of demand planning, strategic negotiations, and stakeholder management. However, too often, procurement teams face several challenges in meeting this goal, which leads to the next takeaway…
2. Value, Value, Value
Modern procurement professionals are looking for ways to provide value to their stakeholders and organizations by serving as partners instead of sticking to their more traditional roles. The challenge is that defining a value story can be elusive, especially when stakeholders are unaware of what they are missing out on by limiting procurement to POs.
For example, procurement professionals often want to participate early in the discussions. This allows them to work with suppliers and internal stakeholders more effectively than they can when they are brought in for later details of discussions. Often, they are brought in too late to do anything that adds noticeable value to the organization.
3. Dedicated Centers of Excellence
Interestingly, procurement teams are working on developing Centers of Excellence (CoEs), which have the potential to give them authority beyond the PO.
A procurement CoE is a dedicated team or unit within an organization responsible for leading and driving excellence in procurement practices. Typically, the CoE focuses on specific areas of procurement, such as supplier relationship management, strategic outsourcing, or procurement process improvement.
The CoE’s goal is to optimize the organization’s procurement processes and outcomes while providing guidance and support to other procurement teams within the organization. It’s possible to have multiple CoEs in an organization to manage different aspects of procurement.
4. “Selling” Procurement Capability
For procurement to move beyond the PO and into developing CoE and value functions, they need to demonstrate that they can do more than PO processes. Thus, they need to “sell” their capabilities to the organization so they can develop their value and unlock the CoE.
Doing this requires procurement teams to take on a more consultative role in a specific area of knowledge within the organization. Procurement professionals must know the market and tools better than stakeholders from a market research and data perspective. Procurement professionals can become experts in specific business areas and offer strategic guidance that helps stakeholders make more informed business decisions.
5. Market Research and Data Analysis
Of all the levers procurement professionals can pull when providing value to a department, market research and data curation and analysis are among the most powerful. By providing pricing, usage data, analytics, and insight, procurement creates a position that straddles procurement, finance, and operations, allowing it to move beyond the PO.
However, not all organizations are ready to leverage the full potential of market research and data. To tap into market research to activate better processes and procedures, an organization needs to undergo a digital transformation.
6. Digital Transformation
You’re likely familiar with the buzz phrase “digital transformation.” It is frequently cited as a long-term corporate initiative that can take as long as five years to complete.
Digital transformation is more than just using technology to get work done. It requires organizations to take a wholly digital approach to processes previously done manually or analogically. As one procurement professional put it, “it’s about confidence, curiosity, and flexibility. If you don’t have that, you can’t digitally transform.”
Many modern procurement professionals recognize that they need to have the right tools, systems, people, processes, and organizational will in place to grow their value and develop more competent CoEs. Thus, many procurement teams are working on pushing for a digital transformation process within their organizations to establish their KPIs and improve their efficiencies. Some practical ideas include:
- Using network maps prior to implementing a solution
- Hiring within to dedicate time and effort
- Focusing on solid user experience
7. Contract Management Software (CMS) and Contract Lifecycle Management (CLM) Software are No Longer Optional
CMS and CLMs are essential parts of the digital transformation effort for procurement teams contemplating the contract lifecycle. These software platforms enable procurement to streamline processes and manage contracts from start to finish. Yet, they are only being used by some.
A live poll at Consero asked attendees whether they had a CLM. About half of the participants responded affirmatively, which was evenly divided among procurement teams and legal departments.
The poll demonstrated that fewer than 25% of procurement professionals at the event owned CLM in their wheelhouse. Therefore, CLMs and CMS are a growing area that can help procurement teams provide and demonstrate their value.
8. Contracting as A Bottleneck
Our conversations with Consero attendees reaffirmed what we already knew – the contract process is wholly inefficient, especially when procurement needs to be involved. Therefore contract management tools like DocJuris are essential components of the procurement team.
Our conversations highlighted that the inefficiencies procurement teams deal with in contracts are due to four primary things:
- Length of which contracts get delivered
- Retention and sharing of best practices and guidelines
- Delegation of duties between legal and procurement
- Approval process for completing the contract
Finding ways to minimize or eliminate these inefficiencies will allow procurement teams to add considerable value by pushing more contracts through in less time without sacrificing quality or integrity.
9. Redlining Management
The process of redlining is painstaking and contributes greatly to the issue of the contracting bottleneck. However, fortunately, contract authoring software empowers procurement teams to manage the contracting process.
For example, they can use DocJuris to automate several tasks, such as screening reports and playbooks, integrating playbooks, and setting up Microsoft CLM to save time. Procurement’s success with using DocJuris to manage redlining and contract review will demonstrate that it can be a trusted voice in vetting new solutions.
10. Building A Business Case
Last but certainly not least, we learned about the importance of building a business case for procurement initiatives. Stakeholders need to know that there is a business case for making a change that procurement proposes.
For example, procurement can use redlining and contracting bottlenecks as an organization’s pain point to make their case for pushing solutions and values through via the CoE. They can build practical and pragmatic KPIs that demonstrate how the chosen solutions save the organization time, energy, resources, and risk.
See How DocJuris Adds Value to Procurement Teams
Procurement teams are poised to add significant value to their organizations–if organizations know how to listen.
DocJuris software can help procurement teams demonstrate their value by dramatically reducing the time it takes to redline and review contracts. See how it works by scheduling a demo.