There is a reason behind every change that occurs in the world of sourcing and procurement, some changing characteristic that makes the new model inevitable. Information technology is one of the prime movers today, impacting supply chains in ways similar to how it has affected other corners of business.
Fast and accurate data transfers have changed the calculations behind sourcing, and organizations have stretched around the globe on the back of better IT. Even the next generation of potential supply chain game-changers, such as the use of blockchain features, have a heavy technological component. Digital innovation and strategic changes have never been more closely related.
Old responsibilities replaced
A recent Supply Chain Management column by contributor Kalpesh Swali quantified how much is changing in the world of sourcing. The old responsibilities assigned to procurement departments in the pre-strategic days, mostly consisting of driving savings during transactions with suppliers, have changed. The priority to set up contracts and transactions hasn't become unimportant; it has simply been automated and made to work with drastically reduced amounts of human input.
With their old roles automated, procurement professionals aren't superfluous or unneeded. In fact, freedom from some of their day-to-day duties has given sourcing leaders more time to throw themselves into the more significant and strategic elements of their roles, according to Swali. This can involve implementing analytics systems to improve decision-making, working closely with suppliers to deliver innovative products and services, or integrating their work more closely with other business departments.
Swali suggested that increased digital focus in the procurement department is a hallmark of companies that are interested in truly transforming themselves and making the most of the digital "revolution" ongoing across industries. Considering the innovative tech tools set to debut over the next few years will likely be just as effective and influential as the ones that companies use today, transforming isn't a one-off event. Rather, this evolutionary process will keep happening for years to come.
When it comes time to actually make an investment in the IT that will let procurement move into a new era, companies may not always make the right choice at first. Chief Executive contributor Chris Crane explained that businesses today are better at adopting technology in customer-facing roles rather than less visible offices. This could lead to a situation where organizations could appear advanced to the outside world but still rely on inefficient and old-fashioned operations where it counts. Businesses that end up in this situation could have a hard time with getting sourcing to a strategic state.
Crane added that getting processes to catch on becomes easier when systems gain champions who promote those solutions to the rest of the company. If technology is driving early positive results and return on investment, adopters shouldn't keep that information to themselves. The value of strategic sourcing is clear once these tools and practices take hold. The early days of using the related systems could be defined by a struggle to ensure the products catch on. If the company's approach to sourcing starts to change, this evolution may continue.