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Grow in Any Economy Through Procurement

To outperform peers, businesses must see procurement as a growth engine and adopt new techniques.

Historically, those in charge of procurement and the processes they supervise haven’t always been regarded as trusted partners for strategic growth.


“It was seen just as a cost center. A back-office function. When I need stuff, I’ll let you know,” says Patrick Reymann, research director, procurement and enterprise applications, at the global market intelligence firm IDC.


But the last few years of upheaval, fueled first by the massive supply chain disruptions caused by a global pandemic, then significant changes in the distribution of work and workforces, have shifted that paradigm to one where purchasing is viewed as a core strategic function. Done right, procurement can be a key component of growth and resilience through any economic condition. And while Reymann believes cost savings will always be job one—“That’s procurement’s DNA”—the recognition of its value beyond cost is rising.

Growth Economy procurement - two men talking

“Compliant purchasing behavior conforms to internal and external regulations as a means of risk identification, ensuring the certainty of sources of supply and driving things like sustainability and diversity objectives,” he says. “All of that flows through procurement and gives it a much larger voice than it had even two years ago.”


Critical to this shift is the role of digital transformation and the fundamental drive to boost the quantity and quality of data that informs purchasing decisions. As digital solutions proliferate, effectively identifying, integrating, and deploying technology to improve procurement requires a holistic understanding of how purchasing processes are impacting the business.


“Focus on what’s not working. Understand your pain points. If you have a limited procurement organization, then maybe you bring in technology to handle tail spend, because you don’t have enough resources for that,” says Joanna Martinez, founder of Supply Chain Advisors, LLC. “Another example might be a company that has a serious commitment to sustainability or to supplier diversity. Tools are required to aid in supplier discovery or to measure and track sustainability efforts.”


The qualities of effective digital procurement

Martinez says that for digital tools to be valuable and drive growth, they need to be easy to use. “What’s the digital solution that’s going to require the least possible amount of time for employees to obtain what they’re looking for, so they’re not going to go rogue?” she says. “You want them to take the official corporate direction because that’s the easiest way and also satisfies their needs.”

"I think of us as the cloud of suppliers, where we’re consolidating a wide range of products and providing that intuitive experience that most users are familiar with. It’s about making the user experience frictionless."

— Chris Costello - Executive Vice President, Worldwide Strategic Accounts, Amazon Business

In procurement, experiences with noncommercial technological tools influence expectations for the way similar experiences should happen at work. “I hear all the time in the procurement application space, ‘We want to create a more Amazon-like buying experience,’” Reymann says.


The replication of the consumer buying experience in a workplace setting is core to the functioning of Amazon Business, says Chris Costello, executive vice president, worldwide strategic accounts, at Amazon Business. “It’s about making the user experience frictionless,” she says.


It’s a principle applying not just to end users making purchases to facilitate whatever work needs to get done, but also those in charge of establishing the parameters and processes around how and what those people can buy. “I think of us as the cloud of suppliers, where we’re consolidating a wide range of products and providing that intuitive experience that most users are familiar with,” she says. “We’re providing access to hundreds of millions of products for business customers with business-only pricing and Business Prime, an experience people are familiar with through Amazon Prime.”


Procurement that drives growth

Whether to drive cost savings or discover more and better options that fulfill strategic objectives like sustainability, supplier diversity, and local suppliers, Costello says Amazon Business is designed to deliver comprehensive visibility into supplier networks across multiple categories. “Not only in unplanned, day-to-day buys—what we call tail spend—but those larger category deals, like everything a company might use for employee onboarding.”


Administrative professionals can utilize guided-buying software to define purchasing options for users, as well as leverage the scale of Amazon Business to find new suppliers—particularly critical for meeting goals in areas such as sustainability and diversity. Critically, Costello says, because Amazon Business integrates with over 150 e-procurement systems, with both “punch out” and “punch in” capabilities and search tools that let buyers search and shop from their own procurement tools, users don’t need to endure a significant learning curve to leverage the benefits Amazon Business provides.


At the core of digital procurement, and the promise it provides, is the ability to add data, visibility, and context to processes that can become extremely complex, Reymann says. “Having a single source of truth is invaluable, first because it provides that common data set,” Reymann says. “But second, it creates visibility to a supply base you may not have even known existed. The increased competition and collaboration are what really drive the value of these tools.”


“Previously procurement begged for a spot at the table,” he says. “Now they’re invited.”



Originally published on the Wall Street Journal, click here to view.



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