Source One's latest whitepaper series offers insights and reflections from ten of Supply Management's most notable thought leaders. Presenting their thoughts on Procurement Transformation, the experts hope to cut through the noise and provide actionable strategies to organizations at any maturity level. This week, we're digging into the series' fourth installment. Titled "The Road Ahead," it focuses on next steps for the 'transformed' Procurement department.
Vendor Centric's Tom Rogers opens Procurement Transformation: Industry Perspectives - Part 4 by acknowledging an unfortunate truth. "Procurement," he writes, "hasn't always been the most popular department." Historically, the function has impressed other business units as an intrusion, a nuisance, and even an adversary. Within many organizations, Procurement's poor reputation and emphasis on compliance has left the department to perform as "little more than a checkpoint."
If Procurement can't successfully advocate for itself, Rogers suggests, outside forces might just pick up the slack. He writes, "Data breaches, natural disasters, ethics violations, and other supply chain disruptions have become an almost daily occurrence." These incidents and their consequences could help build the business case for a more strategic, proactive, and impactful Procurement function. After all, the department is uniquely equipped to assess and address risk factors across the supply chain.
Those companies who've weathered supply chain disruptions have learned a valuable, if painful, lesson. They've learned, Rogers remarks, "That managing vendor relationships is about much more than identifying best-fit vendors and negotiating for an agreeable price." He encourages them to respond by developing dedicated Vendor Management programs to address compliance and performance issues while taking a more proactive approach to risk.
Rogers likens effective Vendor Management to effective Talent Management. In both cases, the process of collaboration and relationship building are unceasing. Leading companies don't forget about their new hires once they've brought them aboard. Rather, they engage in an ongoing dialogue characterized by consistent feedback and active listening. "There's no reason," he writes, "managing vendor relationships should be any different."
Though Procurement boasts great potential as a risk manager, Rogers is quick to caution the function against going it alone. Instead, he suggests, appointing Procurement as one of many voices within a diverse Vendor Management Committee. Leveraging perspectives from across the organization, these committees will better serve the enterprise's business objectives.
The increasing prevalence of supply chain disruptions is certainly cause for concern. Organizations who fail to develop methods for proactively addressing risk can expect to lose out on savings and even suffer legal penalties. For Procurement, however, supply chain risk presents a golden opportunity. By distinguishing itself as a guiding force for low-risk purchasing, Procurement can finally accept its rightful strategic role.
Read more of Rogers' thoughts in Part 4 of Procurement Transformation: Industry Perspectives.