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The New Value Pillars of Procurement

Companies are paying unprecedented attention to buying practices. What tools can help them thrive?

 

The last two years have brought a new focus on supply chains and the potential for disruption for companies unable to maintain resilient, robust and agile practices around procurement. The ability of the enterprise to execute on strategic goals is dependent on employees having everything they need to perform. It requires true visibility into spending processes and modern tools to create efficiency and minimize disruption. Not surprisingly, in Deloitte’s 2021 Global Chief Procurement Officer Survey, while cost savings was still a significant priority, respondents identified operational efficiency (78%), digital transformation (76%) and innovation (73%) as key forward-looking strategic goals.

 

For procurement professionals in industries from energy to retail, the imperative is clear: The old ways of doing business are no longer an option; future disruptions and a rapidly changing competitive environment require rethinking purchasing practices and the tools that power them. “Digital transformation ​​is at the top of the priority list, and organizations are seeking out best practices and key technology partners to help bolster their supply chain strategy,” says Chris Costello, executive vice president, worldwide strategic sales at Amazon Business. “Our customers are bringing it all together to achieve spend visibility across every facet of their business.”

 

1. Digital Optimization

Digitizing procurement operations has allowed many organizations to meet sourcing demands, boost productivity and optimize costs. Honeywell gained superior spend visibility by integrating and automating its purchasing process with digital solutions from Amazon Business. The benefits to employees are clear, says David Canales, Honeywell’s digital procurement manager.

 

“Our employees are empowered to make purchasing decisions, because while procurement is still part of the process, we’re not part of every transaction,” he says. “We’ve been able to find repetitive items with very good prices, excellent delivery options and a great buying experience as well.”

 

The ability to integrate existing digital procurement solutions is also critical to instituting transformation in purchasing without excess disruption, says Don Cloonan, global manager of sourcing at New Balance. “We have Amazon Business integrated through Ariba as a punch-out. That makes the process pretty seamless, and it’s the end users that really get the advantage,” he says. “We have more visibility into what people are buying, it’s more controlled and everything is automatically audited into Amazon Business.”

 

2. Purchasing Agility

Like many large enterprises, energy giant Chevron must design procurement strategies to keep different business units operating smoothly in often radically different environments. “Chevron operates in many remote locations like the Permian Basin in the southwestern United States, where our holdings total approximately 2.2 million net acres,” says Natalia Vornic, global category manager, MRO procurement optimization at Chevron.

 

Using the tools of Amazon Business, Chevron was able to construct ordering solutions allowing regular, reliable delivery to this incredibly challenging environment, where delivery locations often lacked any physical address. As a result, orders once requiring weeks for delivery could now happen in days. At the opposite end of the spectrum, “Chevron’s retail stations may be a lot easier to get to,” Vornic says. “However, the stations do not have a lot of storage capacity, so just-in-time procurement and product availability become critical for us to manage our business effectively in these locations.”

 

This capability is central to the capabilities of Amazon Business, Costello says. “Our customers can choose their preferred delivery options, and benefit from our broad warehouse network to deliver what’s needed on an as-ordered basis,” she notes, “so we’re serving as a strategic option across all categories for our customers and are offering security, resiliency and continuity for all types of operations.”

 

3. Corporate Social Responsibility

In the 2021 Deloitte survey, 67.6% of respondents prioritize corporate social responsibility (CSR) initiatives, a 22% increase over the 2019 survey. High-performing companies are three times more likely to be measured on their progress around CSR, making intentional and explicit connections to issues like supplier diversity and environmental protection. Amazon Business, Costello says, empowers companies to create coherent practices around any number of CSR priorities. “Guided Buying means they can leverage our capabilities to direct spend in preferred areas, whether in supplier diversity, local purchasing or more sustainable supplies,” she says.

 

Volvo Car USA (Volvo Cars), for example, has made sustainability a major priority across the company and has asked its network of retail stores to reflect those concerns.

 

“We’re incentivizing our retailers to remove all single-use plastics, and it’s important for us to have just one process across all retailers,” says Alex Penning, senior buyer expert at Volvo Cars. “We’re helping out the retailers by subsidizing a portion of the products that we’re encouraging them to utilize, and we can track and make sure that they received them. It eliminates a lot of the manual effort for the Volvo network development team.”

 

"We’re serving as a strategic option across all categories for our customers and are offering security, resiliency and continuity for all types of operations. You get better results with better oversight, and that benefits everyone."

— Chris Costello, Executive Vice President, Worldwide Strategic Sales, Amazon Business

It’s the ability to remove burden on internal procurement teams as well as end users that provides value for companies purchasing through Amazon Business, Costello says. Tools like curated shopping lists increase efficiency while also providing guardrails and visibility enterprises need. “You get better results with better oversight, and that benefits everyone,” she says.

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