The business world is a dynamic one with changes coming in it on a regular basis. It is important that any organization moulds its external relationships and internal operations so that they remain prepared for the future. Since there is neck to neck competition, uncertainty and volatility in a business, there should be ways of adapting to the necessary changes. Great emphasis is laid on change in operations within the organization, particularly the ones which are directly linked to external environment like procurement.
If one wants to reach to the supply base of an organization it has to be reached via the Procurement function. Responsibilities like managing and establishing relationships with suppliers, giving expenses for sourcing services and goods are handled by this function. Therefore decisions on procurement affect the total performance of an organization like responsiveness, quality, cost terms, revenue generation and so on. Professionals involved in procurement function are integrally involved in the business process improvement procedure and their performance is judged by the top management of the organization.
The procurement function is also undergoing many changes keeping in mind the environmental alterations that are going on. It is playing a pivotal role in generating more revenue than managing costs. Businesses can be greatly influenced with the help of right procurement function. Along with procurement, supply management also has a decisive role in impacting the performance of an organization. Therefore procurement will not only deal with cost cutting methods, but also concentrate on improving value for the customer and guard the organization from external dangers and risks.
Findings of the Research on Procurement Function – Reshaping Procurement
Here are certain things that will play a crucial role for deciding the structure and shape of procurement:
- Web applications and data management will become important features.
- Relationship management will take an important place.
- Global sourcing will be high on the activity list.
- Risk management and complexity management will turn into an important issue.
- Sourcing and supply will be the major areas based on which strategic business decisions will be made.
- Skills development of procurement will be very important.
Some Actions which are Mandatory for Meeting Future Needs
It is true that procurement function will become more challenging and different from what it is now. But it is also true that job scopes in the profession will be high. To be successful in the same, it is important to take some vital actions in different critical areas:
Demands of Quick Response
Unpredictability has become the rule in supply and demand and this is one of the toughest areas with which procurement function has to deal. It is important that there is flexibility in the business so that it can cope with the changes. Near-shoring or key-shoring are vital for procurement plans in the future.
Tactical Approach Towards Procurement
Procurement should now contribute more to value-adding and profitability rather than having a transactional-focused role. It becomes the responsibility of the procurement managers to concentrate on more strategic areas like outsourcing, supplier relationship management, mergers and acquisitions and global sourcing.
Supply Risk Management
There are new risks that come with global supply bases. Some of them include things like poor visibility, changing life cycles, terrorism and regulatory changes, quality issues and so on. Newer contingency plans have to be devised to combat these problems. These are times when procurement professionals should make their presence felt and have influence on strategy making and enhance performance.
Finding the right talent for procurement function in a business is becoming a challenging thing with each passing day. There are innumerable grave responsibilities on the professional involved in procurement function and therefore he should have a great understanding on the subject. The best is needed in the profession.
The author of the article is Evans who is associated with Big Sky Partners Jim Balestra.