SAP: Why procurement leaders are the gatekeepers for the new sustainable business
A recent report found that 97% of companies believe they need to improve the visibility and transparency of their network. While of course this level of understanding is needed to ensure the steady flow of goods and services to avoid the supply chain disruption we saw over last year, it is also now required to address ethical and sustainability concerns.
The importance of procurement professionals in this formula can often be overlooked, with their role historically being thought of as cost-reduction and business efficiency. However, if companies want to ensure minimal supply chain disruption but also meet their sustainability goals and eliminate wasteful practices, supply chain visibility is only becoming more important. So just how can the procurement leader drive real innovation to ensure both goals are met?
Collaboration in the Cloud
For procurement departments, whether in government or at a privately owned business, one of the top priorities is the maintenance of their partner ecosystem which, historically, has meant strengthening existing relationships. That said, a major factor in an organisations’ future ability to innovate, particularly on sustainability efforts, will be the diversification of its supply network and opening up to new partners.
Aggregating and shaping this network requires agile communication and a smooth exchange of insights through cloud and data services. While we have seen some integration of these technologies, largely accelerated by COVID-19 which reinforced how the digitisation of procurement functions is essential for business continuity, our research shows that over a third of executives say most or all of their procurement processes are still manual. This simply will not support procurement leaders’ need for continual supply chain innovation.
But our research also exposed a group of leaders: those investing in technology and process digitalisation to help anticipate the unexpected, fuel business agility and resilience and elevate the strategic value of procurement to the business. It’s no surprise that 85% of these leaders say that by embracing these procurement technologies, they can make data-driven decisions about spend across the organisation. What’s more, 81% say it allows them to mine global data to understand performance against KPIs, which some of will likely now focus on ethical and sustainability ambitions.
This shows that all procurement executives need to be embracing cloud-based tools that allow them to validate things like the environmental impact data of their suppliers and map that against specific sustainability end goals. A successful cloud infrastructure has a strong role to play as a framework for the data exchange between suppliers and partners and fosters greater accountability across the partner ecosystem.
Intelligent Thinking for Intelligent Technology
However, as we often hear, intelligent technology alone will not magically solve the problems of climate change if we do not deploy it intelligently. The use of technology must be tempered by careful evaluation from decision makers. Our research also indicates that only 58% of executives are conducting a regular analysis of their suppliers and how this mix aligns with the organisations core priorities.
Simply because a procurement decision is made with the support of one-time data, it does not mean that the partner or service selected is the one which best matches your ongoing sustainability journey. When the regulatory goalposts are so often being moved when it comes to reducing environmental impact, decision-making needs to be in constant evolution and so too does the information used to bolster those decisions.
For procurement professionals to have a meaningful impact on sustainability and ethical goals, they must begin to take advantage of data and technology as an aid to communication with partners, not a substitute. Data insights, when properly leveraged, can help procurement managers make informed decisions about the organisations they choose to do business with. Simultaneously, cloud-based models enable partner ecosystems to reconsider the way in which they interact with one another, pushing supply chain innovation that will lead to a more circular economy, where greener practices are prioritised and rewarded.
This article was written by Henrik Smedberg, Head of Intelligent Spend Management UKI, SAP. With over 20 years’ experience as a leader within the software industry Henrik has had the pleasures of speaking and learning several languages these include, Swedish, French, Chinese, Mandarin and German. Henrik has also been a Cloud Evangelist since 2001, and an expert in Procurement. Read more…
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