Increasingly, procurement transformation has demanded alignment between new technologies and a mindset and action model centered on customer experience. Procurement teams that adapt to this new operational paradigm will become the true transformation agents in Procurement, elevating the sector's role to the front office of their organizations.
By Gabriel Aleixo
The term “Agile” is not new, but it has already transcended its roots in software development to become a differentiator in operations, Supply Chain, and shared services and support areas. In this context, the Procurement area is increasingly interconnected with these interfaces.
Agility is defined as the ability to think and draw conclusions quickly, and to move swiftly and easily.
Agility in the Procurement Transformation process is capable of:
- Forecasting and prioritizing the flow of risks and opportunities
- Transforming the culture to be built to evolve
- Configuring supply chains to become more agile
- Orchestrating internal resources and partners to respond quickly and flexibly
The Agile approach is also a way to transform, and even a necessary “way of thinking”, to achieve operational excellence and navigate current market complexities.
Procurement teams that move swiftly alongside their various stakeholders are remaining relevant and transforming within their organizations. Furthermore, they are creating new paradigms with the help of new ideas and new digital resources. Procurement transformation is also happening as this team proactively addresses opportunities offered by their ecosystems, gaining competitive intelligence through their suppliers.
Agile teams outperform their peers across all key performance metrics. They surpass savings targets and performance indicators while maintaining greater influence at the C-suite level by increasing internal customer satisfaction (SLAs). They also stand out for risk mitigation and demonstrate greater aptitude in executing strategic projects. This is the procurement transformation that tends to strengthen as leadership mindsets shift.
Beyond strong performance in the face of adversity driven by an increasingly complex environment, agile Procurement teams can deliver today and transform to deliver tomorrow. In other words, mastering agility provides Procurement teams with better opportunities to achieve goals highly valued by their stakeholders that are considered strategically impactful.
So, what can Procurement Teams do to increase their agility?
Customer focus is fundamental. Regardless of the required transformation methodology—Lean, Total Quality Management, CRM, Agile Methods, or Design Thinking—the customer is always at the center. Agile leaders achieve better performance through higher “quality of stakeholder influence,” rather than merely focusing on “quantity of influence centered on Sourcing [Financial Perspective].”
Furthermore, high-performing Procurement Teams have:
- A high probability of deploying Predictive Analytics, for example, for spend forecasting.
- A higher likelihood of receiving the necessary corporate support to shift focus from tactical and operational to strategic
- An increased likelihood of leveraging current management models to access new knowledge, resources, and expertise not yet available
The digital capability gap in SRM (Supplier Relationship Management) modules is clearly recognized by Procurement departments. Currently, most organizations do not use SRM modules to collaborate with their suppliers.
In addition to widespread concerns surrounding post-pandemic economic recovery, Procurement teams consider supply assurance and supplier resilience to be the primary risk issues to address. However, they also believe that engaging and collaborating with their current suppliers is critical to generating sustainable value for organizations. This is evidenced by the fact that information sharing among suppliers was the primary supply risk mitigation strategy prior to activating alternative supply sources and increasing inventory coverage.
Clearly, it is difficult to collaborate with hundreds or even thousands of strategic suppliers in a scalable manner when operating with minimal resources and tools. Thus, a mindset shift combining technology and focus is of paramount importance. That is, developing a robust approach to supplier segmentation considering Risk, Spend, and Performance becomes essential.
The importance of procurement transformation is increasingly highlighted through the opportunity for Procurement Teams to act as facilitators. Collaboration can enhance resilience by helping organizations make decisions and communicate more effectively, fostering a sense of trust across the entire value chain.
When the pandemic peaked in 2020, many CEOs realized they needed to accelerate decision-making and improve communication within their organizations. Ultimately, Procurement Teams need to ask themselves three essential questions on their journey to becoming more agile and establishing the foundation upon which performance can be delivered now and in the near future. They are:
1. How can we build an Agile Procurement model that enables us to acquire the required talent, with the necessary expertise, knowledge, and experience?
2. How can we configure existing systems and processes to increase efficiency and capacity, establishing a scalable foundation that can adapt to market challenges?
3. How can we leverage data to understand what is happening, predict outcomes, uncover opportunities, foster alignment, and make better decisions—faster and with reliable, measurable results?
