Organisations are increasingly using their procurement practices and supply chain to increase productivity and profitability. An efficient functioning of both is now widely accepted as the key element of overall business strategy. Technology upgrades is the key driver for transformation in procurement processes, say the Property/Facility Management experts. The emerging technologies such as AI, blockchain and the Internet of Things (IoT) are making supply chains more transparent by delivering real time data. By effectively adapting to the supply chain digital revolution and adopting connected supply chain planning, a company can achieve lower costs and increased efficiency. Mangala Chandran gets the leading procurement professionals to join an interesting discussion.
Facilities Management (FM) is a dynamic function and is expanding. It supports business functions by creating an efficient built environment for clients, occupants and visitors. It has become critical for service providers or FM heads of different organisations to maintain cost leadership and high customer satisfaction. Traditional demand plan, procurement processes and supply chain management often do not match with the increasing needs of FM companies or FM departments of organisations in varied segments. It is found that there has been a disconnect between the FM managers’ requirements for supplies and suppliers and the way procurement personnel go about this process; companies turning towards transformation of the sourcing and procurement functions, including in the loop all stakeholders — sales, marketing, finance, product development, procurement and supply chain. As the first link in the chain, for the procurement team members to effect change, they would need to understand what the demand is, what they are buying and how they are buying.
So what are the factors that can drive this transformation?
“There are six factors,” says Aval Sethi, Executive General Manager- Procurement Embassy Services Pvt Ltd.
Foundational technologies: Timely availability of data is the key factor for procurement and sourcing activities through centralised systems or tools such as Enterprise Resource Planning (ERP). At the same time, it is imperative for organisations to implement the foundational technologies with sufficient training and development of their staff. The employees need to be sensitized and made a part of the organisational change without making them insecure due to the on-going change.
[box type=”shadow” ] It boils down to how procurement stays at the top of the corporate table, not how it reaches there. The way around it is to address talent gaps within the business in keeping with the neverending changes and the several decisions that impact the procurement process
-Aval Sethi [/box]
End-to-end process ownership: Organisational models generally are centralised, decentralised or a mix of both. In spite of the type of model, there are typical expectations of governance by an end-to-end procure-topay (P2P) process owner. It involves end-to-end managing and reporting on KPIs which support purchasing and accounts payables processes. It helps in technology implementations and drive improvements across the P2P process to ensure endto- end optimisation.
Interplay between Strategic Sourcing, P2P and Supplier Relationship Management:
It is not advisable to over-invest in one aspect as compared to the other. A data shows that if all the aspects are balanced, organisations can generate more than 10 times the ROI of other companies. Along with supporting people and technologies, it is essential to balance these aspects for successful procurement transformation.
Aid from external sources: It is important to gather valuable support in order to accelerate transformation efforts. The manifestations include benefits such as bringing external best practices, getting and setting up programme oversight, short-term resource capacity and facilitating cross-functional discussions.
[box type=”shadow” ] The most effective way is e-bidding portals where the baseline price is declared & the purchaser can decide at what level they wish to do their purchase. There need not be the need for negotiation skills as the process is on-line & does not need any face-face dialogue as both the orders & the payment is done electronically once the material receipt has been keyed into the system.
Identification, execution and communication of quick wins: Internal buy-in and ongoing support are essential for transformational efforts. Identifying quick wins that are in tandem with measurable benefits including those impacting the bottomline should help in achieving trust and support from the stakeholders.
Implementing sound change management practices: The whole process of transforming the procurement function requires seamless implementation of change management practices. Effective communication is always a key to success here. The change management should instil a sense of ownership amongst all the stakeholders from top to bottom and acknowledge their roles and responsibilities in a transparent manner.
Putting it briefly, Amit Kumar Verma, Director- Sourcing and Supply Chain, CBRE South Asia Pvt. Ltd, Global Workplace Solutions & Property Management adds that one of the major transformation areas in Facility Management is transformation of procurement process by going the digital way. This is the success and scalable metric for sustainable organisation of the future.
“The FM is being digitized to work on a common integrated digital platform wherein all functions such as operations, AMC’s, manpower deployment, compliances, purchase, finance are interlinked so that the system functions seamlessly and with transparent key results based on the set key performance indicators,” says Keith Monteiro, Vice President, Central Administration , Reliance Industries Limited.
According to Sathish Rajendren, Chief Operating Officer (COO) – India Facilities & Asset Management Services, Knight Frank (India) Pvt. Ltd, the smart technology tends to be transforming the world of work and see better collaboration as a driver of workplace strategy that has services, facilities management and project services under one process and decisionmaking. One needs to consider how the balance will shift between physical to automation.
Manish Thakkar, Director- Supply Management – Sodexo India speaks of how Facility Management, as a topic has advanced from conventional housekeeping services to workplace experience management. “So, by definition, earlier the mandate for service providers like us revolved around the facilities. We were required to service and maintain v/s now, where the whole service aspect revolves around the consumers / client’s employees. What matters to them is how services have evolved and progressed over a period of time. 2019 was the first year of GenZ completing a year at the workplace. These individuals, as per Sodexo’s Workplace Trends Report consider ‘sustainability’ as an important employment consideration. As a result, workplaces are starting to ask for the appropriate products, solutions and technology that can help reduce the overall carbon footprint with elimination of single-use plastics, promote use of organic chemicals, robots and mechanization and supply chain integration for the best outcomes.”