The World of Procurement Is A Dynamic, Ever-Evolving One
Maximillian Tan, Director of Business Procurement Asia, Frieslandcampina
Maximillian Tan, Director of Business Procurement Asia, Frieslandcampina
Over the years, the function had grown significantly in being recognized as a critical contributor to success. Gone are the days when the role is limited to purchasing inventories to simply meet the demand forecast and procurement has evolved into a powerful enabler for businesses to unlock value out of supplier relationships.
Zooming in on the challenges in the last few years, an increasingly VUCA environment has placed procurement front and center in dealing with uncertainties. Within less than 24 months, businesses have had to deal with surprises ranging from natural disasters and global pandemic to geopolitical conflict and a looming recession amidst record-high inflation rates.
Fortunately, there are several strategies that businesses can use to mitigate these challenges. Firstly, they must keep a close eye on global developments and adopt an agile operating model to be able to adjust their plans accordingly. Second, they can work on improving the reliability of their supply chain to ensure that their products reach their destination without any disruptions. And finally, they can invest in technology that can help them streamline their processes and improve efficiency to enable the earlier two strategies.
It is proven throughout this period that organizations trifling with a transactional relationship with their suppliers tend to struggle to navigate the treacherous waters filled with such disruptions.
On the opposite end of the spectrum, strong partnerships fueled by mutual trust and respect thrive in the face of crisis.
Beyond the traditional relationship building, trust and respect are gained through having transparency and accurate information shared among partners. Having access to what business partners are working on and prioritizing helps each other to work towards the mutual goal to serve the end consumers. Having a platform to manage the relationship with an external partner that is practical, reliable, and secure would give the entire value chain a competitive advantage.
Another drive for adopting technology comes from productivity and efficiency, which have been the holy grail since the dawn of the Industrial Revolution. With IR 4.0 taking center stage in industries of the future, people are expected to take the full benefit of tools and information in performing their activities. Procurement professionals are not exempt from this trend, and technology development in this area had grown quite rapidly as well.
The source-to-Pay process has been enhanced with a much better UX for the users in finding items through catalogs based on Procurement-sourced contracts, and more efficient invoice processing, as well as employing robotics and AI to process simple tasks such as registering a vendor or material.
Having Access to What Business Partners are Working on and Prioritizing Helps each other to Work Towards the Mutual Goal to Serve the End Consumers
For global organizations, having a uniform view and language leads to an effective analysis and decision-making process. Therefore, it is critical to build a globally-accessible repository of certain key assets and information such as specifications, supplier performance, governance, and innovation pipeline.
Procurement is increasingly being carried out collaboratively with business partners from other functions such as marketing, engineering, and finance departments, as well as the suppliers themselves. This collaborative approach allows for unlocking more value from the total supply chain and forging better relationships with external partners. This collaborative procurement process will continue to evolve, and embracing technology and information is a key differentiator in achieving success in this journey.
