Innovation is not just about inventing something new; it also involves improvement to existing processes and using the competitive market to come up with better ideas before turning them into reality. Over the past decade, we have seen a significant increase in turnover in procurement as companies focus on their core capabilities and outsource other activities. This has increased the influence of procurement as a business function typically controlling spend in one way or another. At the same time, the nature of innovation – recognised by most successful companies as the key to sustainable growth – has evolved from a purely internal capability to something to be delivered in collaboration with the external network of suppliers, writes Aval Sethi, Chief Executive, Protaiga.
Integrating Innovation in the Supply Chain & Procurement Process
Most businesses exist in a competitive market. The competitive market drives innovative solutions as also helps access market experience and expertise to come up with new and different ways to achieve desired outcomes. To embed innovation in the Supply Chain & Procurement process, the following four areas need attention:
Procurement as a Service (PaaS)
For a business to maximise its performance, everyone in the organisation needs to deliver at capacity. Procurement is increasingly relied on to deliver bottom line results and added value to the business. At the same time, the function is faced with ongoing pressures which are adding to the workload. Even though technology tools have been brought in as an enabler, more often than not these are adding further skill pressures to an already over-utilised department. Suddenly procurement managers is expected to be experts in every category in every market, as well as experts in using new technologies. It’s no wonder that traditional investment in procurement technology often fails to return the benefits expected. For many CPOs, the main focus is on sourcing options, delivery methods and contractual terms. And yet we hear over and over that procurement needs to get better at the communicative aspects of effectively managing and delivering to the business outsourced procurement.
The best in class solution to this is “Procurement as a Service” (PaaS). PaaS helps you to purchase best products and services available to optimise system and run business more efficiently. With intelligent use of technology solutions and defined processes, PaaS helps enterprises reduce costs, improve efficiency and drive business results.
Within the Business PaaS cannot succeed if there are no strict measures taken within the business. To name a few:
• Strong Skills – Procurement must provide training and mentoring with those responsible for buying and managing vendor
• Clear Processes – The business will respond positively to clear, relevant, and justifiable processes integrated into wider business processes and linked to delegated authorities. Procurement has to jointly work these out with its customers, then own them, and communicate them into the business.
• Responsive – There is nothing worse than a business requirement delayed by bureaucracy and indecision; The procurement officer has to find ways of being agile so the business can achieve its strategic objectives.
• Locally-Owned – Business departments must own their own contracts and not have centrally provided contracts foisted onto them.
• Service Driven Contracts – Procurement must work tirelessly to ensure contracts and vendors are delivering service, innovating, and adding value to the business where needed.