Achieving procurement's strategic priorities

Last year proved that the purchasing landscape would never be the same. Department leaders are increasingly turning to procurement teams to keep their organizations moving like never before. Through the recent challenges, we’ve seen inspiring examples of procurement teams that have worked tirelessly to support their employees, maintain operations, reimagine educational experiences, and advance racial equality through the use of digital purchasing technology.

These changes will have lasting implications. 96% of buyers who increased online procurement during the pandemic anticipate their organizations will continue doing more e-procurement, even as pre-pandemic business functions resume¹. As procurement leaders continue to play a critical role in organizational recovery and growth, what should be the focus for these teams?

Managing procurement imperatives
Diversity and inclusion initiatives are taking a more prominent role through many facets of business, including buying processes. In fact, 83% of procurement leaders surveyed say their companies plan to increase purchasing budgets reserved for Black and minority-owned businesses, with almost half of respondents planning to increase their budgets by 20% or more¹. However, the majority (55%) of procurement leaders lack specific strategic sourcing requirements and almost half (40%) struggle to find qualified, diverse suppliers².

Additionally, supplier risk management is now a key focus for the majority (74%) of procurement leaders³. Risk mitigation activities include testing supplier continuity plans, gathering more financial and operational data, and revisiting contract terms and conditions.

Mitigating supplier risks and expanding diversity-spending initiatives are just a few examples of procurement’s strategic objectives. Unfortunately, achieving these goals requires time that many procurement teams don’t have. Further, more than half (60%) of procurement leaders report greater cost savings goals this year compared to 2020⁴. So as the old adage goes: how do we do more with less?

Gaining cost savings while achieving strategic priorities
Cost cutting and short-term reductions can impair your organization’s agility, compromise performance, and affect your strategic focus. To be successful, procurement leaders must have a holistic approach to reduce costs while maximizing organizational value.

One way to optimize costs is by deploying digital technologies that automate tactical work and generate insights from disparate data sources. This allows procurement leaders to:

• Identify new sourcing opportunities using big data analytics that evaluate internal spend, expenditures to specific funds, and market data.
• Accelerate execution speed by enabling purchasing tools to process purchasing orders and reconcile invoices without human intervention.
• Increase savings rates by identifying opportunities to match prices across teams and departments.
  
• Drive compliance with internal purchasing policies and guardrails.
  

These capabilities can help procurement leaders make better data-driven decisions, reduce manual activities, and reinvest time and resources in deeper, more value-add initiatives for the organization.

Watch our on-demand webinar "Cost optimization for procurement" to lean new ways to gain efficiencies and maximize business value.

Sources:

¹ Amazon Business, B2B E-commerce in Evolution Report, 2021.
² 2020 Gartner Procurement Research Poll.
³ Gartner COVID-19 Procurement Quick Poll, 25-29 May 2020.
⁴ Gartner Peer Insights on Cost Optimization 2020.