Changing your procurement strategy to be more inclusive is no small feat. It requires new skills, investments in new capabilities, and an agile and resilient procurement team. This article will compare traditional procurement with strategic sourcing and why strategic sourcing is essential for companies of all sizes. You can also get tips for embracing the new methods of sourcing, which are transforming the way companies do business. Listed below are some of the benefits of strategic sourcing.
Building an agile and resilient procurement team
The current landscape for the procurement function requires a new level of agility and resilience. The role of the procurement team must evolve to accommodate the ever-changing needs of the business. It must develop an agile mindset and access the appropriate technology resources. Agile teams are better prepared to respond quickly to business priorities. This report by Gartner provides some critical steps to ensure the success of your procurement team. Read on to discover the benefits of an agile procurement team.
Firstly, supply chain agility requires detecting changes and adapting quickly. They may use procurement software or may refer to websites like TradeBeyond.com to adapt quickly. Without a multitier view, it will be challenging to make informed decisions. As such, data is the king. Data and analytics technology will help your team become more agile and resilient. In this way, your procurement team can better plan and execute its strategies. And as a result, it can be more effective than ever.
By building an agile and resilient procurement team, you can take a proactive approach to problems and adapt quickly to changes in strategy and regulations. It will enable you to utilize real-time insights into category spending and draw on collective wisdom to make decisions. By understanding the strengths and weaknesses of different teams in your organization, you can maximize your team’s potential and leverage its assets to save money and produce value.
Investing in new talent and capabilities
The procurement function must invest in new talent and capabilities. Using assessment results as a basis for strategic procurement capability building helps companies identify key competencies that will drive value. In addition, they can use these findings to justify resource investment and establish baselines for spending and performance. By building individual business cases, organizations can measure the benefits of investments and develop metrics to measure program performance. To maximize the value of strategic procurement capabilities, companies should also pilot new capabilities and create individual business cases to test their impact.
Today’s talent war has created a huge skills gap and a lack of highly skilled professionals. To compete, companies must invest in new talent to attract and retain high-caliber and ambitious employees. Organizations must foster a desirable company culture. Mentoring programs and training opportunities are two essential elements of a robust procurement culture.
Increasing the size of procurement teams requires that companies invest in new talent and capabilities to keep pace with digitalization. As a result, procurement teams must be more strategic and collaborative, and CPOs must push teams to think outside the box and position them as strategic enablers. As a result, procurement organizations must develop internal staff and hire new talent with future-fit skills. By investing in these new skills, companies can expand their scope of activities, change existing operating structures, and leverage new technologies.
Strategic sourcing vs. traditional procurement
Cost savings are one of the significant benefits of strategic sourcing, as it reduces waste and streamlines relationships with suppliers. Furthermore, strategic sourcing focuses on long-term planning and aligning sourcing activities with organizational goals. That is why 54% of procurement professionals place cost savings on their priority list. As a result, strategic sourcing increases business performance and efficiency while minimizing supply chain risks.
In the traditional procurement environment, canceling orders and finding new suppliers are the main tasks. Strategic sourcing builds collaborative relationships between customers and suppliers, enabling them to plan and adjust productivity and respond quickly to changing market demands. The benefits of strategic sourcing are numerous. Here are just a few of them:
The fundamental difference between strategic sourcing and traditional procurement is the collaboration between buyers and vendors. In strategic sourcing, vendors are chosen with the customer in mind, not just to cut costs. By building long-term relationships with suppliers, strategic sourcing allows a company to remain competitive in a competitive market.