This week I attended the inaugural Procurement Leaders Data, Innovation and TechX Summit. Surrounded by fellow senior procurement professionals there was one overwhelming message: innovate or get rapidly left behind.
The unrelenting pace of technological change, mixed with continuously shifting customer preferences and regulations has had a significant impact on business and indeed procurement functions. Today, procurement departments are tasked with not only positively affecting the bottom line through reducing costs, but also creating revenue.
Clearly, the days of procurement being all about expenditure are over, along with sales departments shouldering the burden of being the only team to turn a profit. At the event, we heard how procurement, through dealing with a mass of suppliers, is perfectly positioned to open up these relationships into new revenue streams.
Take the Royal Mail Group for example, who after continually seeing letter volumes decline, decided it needed to expand its revenue streams and looked to tap into the $500 million-a-year China to Europe delivery market. Through utilising its supplier contacts, it was able to sign a partnership deal in China, thereby gaining access to a market that grew almost 50% in the last 5 years.
Procurement functions are increasingly being tasked with acting in a strategic way. Technology, innovation, data and intelligence can all support procurement professionals to succeed against their new challenge, a point widely expanded by the variety of speakers at the summit.
One particular area of interest discussed was disruptors. As a growing buzzword in the world of business, there are not many functions or sectors that have escaped its impact – procurement is no different. Whether it’s cloud-based services, cognitive analytics or new operating models, each has disrupted the function. The recent Deloitte Global CPO survey, suitably titled: Procurement at a digital tipping point?, explains how technology is providing the ability to navigate the key challenges and disruption faced by the function as well as providing better transactional efficiency and agility.
At Tungsten Network we understand the need for businesses to stay agile in today’s ever evolving business environment. Quickly delivering or reacting to new products, services or disruptive forces can deliver a competitive advantage. This is why, we offer continuous targeted and proven supplier enrolment into digital trade to help businesses meet these pressures and support a frictionless supplier experience.
Suppliers are set to have a greater impact on a clients’ revenue streams in the future. Therefore, strategic supplier buy-in is of even more importance for an agile and robust supply chain. You only need to look at the Volkswagen and Prevent dispute to see a supplier’s ability to derail projects with the mere threat of stoppages. The knock-on effects of getting it wrong can see a business subject to a reduced bottom-line, falling share price and loss of reputation.
As technology continues to evolve and businesses find new ways to be disruptive, one thing will remain – the exchange of goods and services. However, the processes surrounding the purchasing of them will, and this is where the opportunity for a business’s procurement function to add value lies. Introducing new digital processes and systems can create a closer relationship with suppliers, provide an automated supply chain not hampered by paper invoices and open up possible new revenue streams.
It was encouraging to see many senior procurement professionals engaged in these key topics at the Procurement Leaders event, which are so important to the future of the function. Tungsten Network looks forward to continuing to support businesses with digital processes to make their supply chains robust and agile, enabling them to avoid supplier troubles and swiftly capitalise on the opportunities in front of them.