3 Ways to Boost Procurement’s Strategic Impact
Collaboration is quickly changing the way we live. We use Waze to find the fastest route to work, we sort through reviews on Yelp to find the best place to eat, and we visit Airbnb to find a more interesting place to vacation. Supplier managers I speak with are eager to reap the benefits of increased collaboration with their key suppliers and stakeholders, but unfortunately there are several common problems that hold them back. Below are three major roadblocks I’ve encountered that get in the way of effective supplier collaboration, along with suggestions on how your team can breakthrough to achieve more success.
Roadblock #1: Doing things the way they’ve always been done
My consulting clients are typically large manufacturing companies in the United States, Europe, and Japan. These organizations tend to be complex, hierarchical, slow to embrace change, and risk averse. Many of their large global suppliers are similarly challenged.
One client of mine was caught off guard when a rotating equipment manufacturer that had been serving them well for decades suddenly couldn’t meet delivery dates. To make matters worse, some sites in other regions were placing orders with this supplier months after delays were already appearing at sister plants. From the perspective of the corporation as a whole, we have critical supplier information such as previous sourcing results, past issues and resolutions, and prior risk analyses. But from the perspective of an individual supply manager, this information is siloed in many separate systems they may or may not have direct access to.
Breakthrough practice: Never stop seeking feedback
A supplier management platform that is well integrated and includes the social features that we have grown accustomed to on Facebook and LinkedIn. Just as my cousin doesn’t have to send the latest pictures of her kids directly to me, a site buyer placing orders for rotating equipment can learn about supplier issues being experienced by other sites because she “follows” key suppliers in the rotating equipment space.
Another example is Supplier Community, a site where a supplier and buyer can collaborate on issues, retrieve information and upload an expired certification could ease the process and save time.
Leadership must embrace collaboration and demonstrate with words and actions that it is a key business strategy. One example might be hosting an annual forum for strategic suppliers to join, mingle and brainstorm improvement ideas. All suppliers have opinions on how to improve your business, but they are rarely asked for them.
Roadblock #2: Lack of time
One client summed up the situation at her company as follows, “We have many great ideas but it takes people’s time to make them work. There are many ongoing initiatives and unfortunately it’s always the same people working on all of them.”
Breakthrough practice: Look for the right technology to optimize your team performance
Emerging collaboration technology presents an opportunity to enhance supply management productivity and enable greater collaboration. The now traditional suite of spend analysis, sourcing and contract management tools are useful. But like our old GPS devices, they lack real-time input from other drivers about traffic conditions ahead. We save time when we use Waze to avoid a traffic jam or Yelp to quickly find a restaurant. The new emerging SRM tools can help supply managers enhance collaboration and optimize the performance of their team.
Roadblock #3: Lack of information
One client summed up the situation at her company as follows, “We have many great ideas but it takes people’s time to make them work. There are many ongoing initiatives and unfortunately it’s always the same people working on all of them.”
Breakthrough practice: Get insights about your suppliers in real time
Before placing that new order for rotating equipment the buyer should also examine the supplier’s latest KPI scores, their financial ratings and in some cases examine ESG ratings. An SRM platform that is well integrated can provide all this information, and more, in one screen.
Accurate, real-time visibility into supplier performance, risk factors, and improvement opportunities is an essential foundation for proactive decision-making. Industry research indicates that over 50% of procurement teams lack centralized, cross-functional access to critical supplier data. Without this holistic view, supply managers are flying blind, unable to anticipate disruptions or identify optimization chances.
A supplier approved list (LSA) that takes all this information and rates the suppliers, is a powerful tool for getting alternative suppliers when needed and in my opinion a must have for any procurement team.
The future presents continued challenges related to geopolitical events,time commitments and information hurdles. But strong leadership, better collaboration and new technology to support it are about to change the supply management function for the better yet again.
About the writer: Sean Harley is the founder and CEO of LUPR Inc. – A cutting edge, collaborative, SRM tool aiding procurement teams in global enterprises.
