Legacy enterprise planning systems are key to all global supply chains, but they are also cumbersome, expensive and aren’t made to support the type of relational data businesses deal with to drive decisions.
Procurement organizations are thinking more and more about innovating old processing systems. What areas have inherent risk in innovating? To what degree do we change? How do we manage it? Who do we get involved? A lot of attention is focused on getting results from innovation and change, especially ones associated with people. Most companies have implemented procedures to manage and grow innovation, but I believe one of the most under-analyzed risks in innovation, and one that could be the biggest threat going unaddressed today, is the risk of groupthink in implementing change in procurement teams.
Thought should be given to what current challenges and problems you are experiencing now. After you answer that question, it’s time to determine who should be a part of your COE (Center of Excellence), which should include subject matter experts who are impacted by the innovation process. These experts will enable the process to have more diversity in thought and input on upstream and downstream controls that may impact key process stakeholders.
As we look ahead to the rest of 2020, cutting-edge technologies will play an important role in the innovation of procurement. New technology brings with it new responsibilities and it’s easy to become lost in the sea of the digital tools available from blockchain to automation to application programming interfaces. It’s important to assess what these tools can actually bring to the organization, and they are most effective when utilized with strategies closely aligned to the values and goals of the wider business. Focusing on a problem and selecting a tool that solves this problem will be vital to its success.
With this in mind, I believe there are three fundamental questions that should frame technology decisions in procurement functions.
Where do we start?
Before selecting any tool, organizations must first assess its’ capacity, including the strengths and weaknesses of the procurement process. A careful analysis of today’s state will lay the roadmap for future strategy and success. For example, corporations are increasingly being held accountable for issues around transparency and risk within their supply chains. Procuring with purpose will look different to different organizations. Analyzing problems first will frame the goal, and ultimately frame innovation choices.
Who gets what information?
Technology revolutionizes the way information is distributed. It lowers the barrier to entry for receiving timely, accurate data and gives power to a broader user base, such as business users that might not have technical backgrounds. But in many organizations, this data is currently scattered across numerous internal and external silos, making it difficult to use this information accurately. Digital tools can consolidate data repositories and provide centralized, real-time access to this information.
How do key stakeholders communicate?
If the answer is ‘not well’, there is an opportunity to introduce tools with new communication features. Leveraging your COE and key stakeholders is key to having domain expertise in the specific areas they operate in, and improved communication and collaboration will create a whole greater than the sum of its parts. The growing ability to track multi-tier data has become an important facet of telling an organization’s innovation story to its various internal and external stakeholders.
By asking these three key questions, innovation, procurement, and their organizations will be better placed to choose the tools that best fit their business needs.
Daryl Hammett | GM & COO ConnXus
CSP, CSMP, C3PRMP