WHY And HOW Procurement Must Change

‘Innovation’ – the action or process of innovating.
“Innovation is crucial to the continuing success of any organisation” – it’s a new method, idea, product, etc.

We’re here at eWorld Procurement & Supply in London and Alex Saric – Global Vice President, Marketing, Ariba, wants to talk about innovation…

While ‘The Innovation Imperative’ sounds like an episode title from The Big Bang Theory, today we were told about a different sort of evolution. Alex wanted to drive home the message that in order to truly transform the function into a strategic value driver, procurement leaders need to innovate.

And while it’s all well and good that we toot our own horn, when we’re talking about innovation it is critical that everybody thinks about procurement, and in-turn goes about their job differently.

Why now? The screws are tightening… Today there’s increasing pressure on companies thanks to increased competition. Just look at new players like Uber who have introduced wildly new business models. But, as Alex notes, whenever there is a great challenge, there’s also great opportunities. As such there is a need to embrace these changes, but to do so, procurement needs to rethink its entire approach.

Crucially procurement (as a function) is in a prime position to take advantage, it needs to strike while the iron’s hot as no-one else has really stepped up to the challenge (yet).

What can procurement learn from Uber?

In order to successfully innovate we need to recognise that procurement is becoming embedded in other parts of our organisations – and in doing so, it is also playing a more strategic role.

Here Alex pinpoints four areas where we can add value:

  • Product innovation
  • Market expansion
  • Working capital management
  • CSR/Regulatory compliance

With all these in mind, what do we need to enable procurement innovation?

People: people need to want to develop. Here we are provided with the example of people not willing to use social media at work, while they are more than happy at home (in personal time). It’s this shift in attitudes that needs to be addressed and adjusted in order to progress.

Automation: the automation of processes will enable you to free your capacity to concentrate on other things.

Connections: in order to drive innovation you are going to be talking to a lot of suppliers (but you need to be talking to the WORLD). Expand your connections by whatever means necessary.

Business networks: Business networks are simplifying business collaboration and delivering benefits across all network participants. In this example procurement isn’t the only function that wins, benefits will be felt across the entire organisation when you open up the communication channels.

Wrapping up a very packed session, Alex reminded us that innovators are already starting to reap the rewards. For instance, Staples has reduced its processing costs and Cisco is making savings across its services. Along with the aforementioned Uber and Amazon, innovation is starting to drive key changes across the world’s stage… The question is what are you doing to follow suit? Isn’t it about time you caught the innovation bug too?