The news that a vaccine for COVID-19 could be available in early 2021 brings with it renewed hope that the world may return to normal by the end of the same year. The pandemic has shown us many things, among them that the resourcefulness and resilience of communities – both locally and globally – is alive and well. That’s been especially true in the business world where organisations and their supply chains have proved flexible and adaptable to change.
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So far Dee Gauci has created 15 blog entries.
Most companies know how much they make each year, but how many know what they’re spending? It’s a pretty big question, but it’s one relatively few can answer. It’s a big question, because close to 20% of what a company spends annually goes on indirect goods – the things that keep the company running – and it all adds up.
Building relationships with stakeholders to a point where procurement is seen as a valuable business partner is a long and arduous road. Even with C-Suite directives, the prospect of change can be an obstacle and changing mind-sets can be challenging. Fortunately, the use of internal data analytics and external market intelligence (MI) has changed the way businesses work. It’s also influenced how they go after success and ultimately how that success is defined.
If proof were needed that procurement is the epicentre of modern business, then one need only look at the demands placed upon it. Its evolution has seen it transform from a price-driven, cost centre, to a strategic powerhouse that delivers on everything from corporate and social responsibility to environmental outcomes.
Reliable data is the cornerstone of modern procurement. Clear information informs wider strategy and drives business performance through informed decision-making. Specifically, it is the data organised by spend analytics tools that are a catalyst for elite performance. Those using such platforms report savings of between 5% and 20% a year after engaging the software, gaining competitive advantage from improved process, enhanced supplier performance and consolidating spend. So how can you drive competitive advantage from data?
In a tight and volatile market where margins are fine and challenges are exacting, every competitive advantage needs to be explored. Despite that, few organisations examine their indirect spend with any real intent – which is surprising given that it grows an average of 7% year-on-year and accounts for roughly 20% of an organisation’s procurement spend. At best, such practices are negligent. Even in favourable market conditions, very few organisations can afford to leak that amount of cash and value from their business.
If you know that you need to get more from your Indirect Procurement (IP) but can’t see the wood for the trees, outsourcing all or part of your procurement operations is a great way to go.
According to procurement consultant David Holmes, there’s one thing driving digitisation: information. In a world where data is the new oil and cash remains king, the rapid exchange of information is high currency. And for any organisation without a clear plan in place to capitalise on their data, time is running out to act.
Your IT hardware is an infrastructure investment. Get it right, and your business is equipped to fly. Get it wrong, and you could find yourself counting the cost in more ways than one.
As the business world slowly regains it’s footing after the COVID 19 pandemic, it will be to procurement that organisations look for help in making a full recovery. Few functions possess the same influence or impact on a business. It has the power to align spend with overall strategy, to improve efficiency and to generate quality through an engaged and empowered supply base.