Let’s face it – procurement isn’t easy.
Today’s procurement organizations are faced with the daunting task of becoming both smarter and more agile while also remaining cost-conscious.
Needless to say, procurement must think outside the box to create winning strategies for 2023.
But what does this look like?
We recently hosted a webinar with our partners, Procurement Leaders, on the key pillars of procurement success in 2023 and beyond. We had the pleasure of speaking with Lynn Torrel, Chief Procurement & Supply Chain Officer at Flex, and Don Hnatyshin, Chief Supply Chain Officer at Molex. They were joined by our own Ken Bradley, Chairman & CTO at Lytica.
Keep reading to learn about the key takeaways from the event.
1. Procurement Should Push For A Bigger Seat At The Table
The world of supply chain and procurement has undergone a dramatic transformation in recent years.
Once relegated to the back end of operations, supply chains are now recognized as a vital business enabler. The events of 2020 and beyond have underscored the need for procurement and supply chain teams to be proactive in their operations. From mitigating risk in the supply base to identifying opportunities for cost improvement, procurement has become a critical driver of business success.
As the changing economy has shown us, a suboptimal supply chain can disrupt daily operations, create chaos within business processes, and lead to unmet consumer demand. However, the risks extend far beyond these immediate impacts. As a result, procurement teams must create a compelling narrative about the changing world and use this insight to drive the necessary changes to business processes that enable their organizations to thrive.
When procurement is seen as a strategic enabler rather than simply a functional entity, it becomes a powerful driver of growth and success for any organization.
2. Use Benchmarking To Your Advantage
What does “greatness” look like in your organization? While it’s tempting to bask in self-praise, ignoring underlying operational issues can be detrimental. This is where benchmarking comes in.
By benchmarking, companies can avoid misrepresenting their success and gain a more objective measure of their progress. Specifically, they may want to benchmark the price that they paid for a certain commodity or their lead time on a certain part v. the industry average.
To stay ahead in 2023 and beyond, procurement teams should leverage modern benchmarking methods to gain external insights and calibrate their strategies for optimal risk management and performance.
In essence, it can’t be improved if it’s not measured.
3. Align KPIs & Business Processes
Aligning KPIs and business processes is essential for organizations to achieve their goals. By aligning practices with critical KPIs, businesses can ensure that their operations are optimized for the desired outcomes.
If a company’s KPIs revolve around reducing its carbon footprint, its business processes should be aligned with this goal. This could involve implementing environmentally-friendly practices, such as using sustainable packaging, adopting renewable energy sources, and reducing waste.
Lynn Torrel, Chief Procurement and Supply Chain Officer at Flex, acknowledged the semiconductor shortage and explained that they implemented a preferred supplier program that used key performance indicators (KPIs) to find ways to work more effectively and efficiently to overcome the challenges posed by the market.
“It’s no longer about getting the cheapest price for a part. It’s looking at all aspects of the delivery and really partnering with suppliers to create a win-win partnership,” said Lynn Torrel, Chief Procurement and Supply Chain Officer at Flex.
4. Understand The Importance Of Data
We all know good, clean data is necessary for making informed decisions. However, creating, managing, and analyzing clean data to make business decisions is a process rife with challenges. Traditional systems for data management and record-keeping may lead to messy, outdated, inaccurate, or duplicate data, and team members often struggle with the need to understand the rules and regulations of multiple programs or systems of data management.
Additionally, organizations often have limited resources available for data management and restricted analytical capabilities that create opportunity costs. But, when messy data is used to make critical business decisions or inform processes, enterprises and their customers suffer.
The good news is that digital transformation initiatives are creating more agile and adaptable systems capable of handling a procurement organization’s data. This is great for procurement teams, who must rely on good data to take informed action.
“Having trusted data sources is one of the great advancements we’ve had during the supply chain digital transformation. In this new digital economy, leveraging trusted data from outside our organizations, including suppliers, customers, and third-party vendors, like Lytica, can drive optimization in supply chain operations.” – Don Hnatyshin, Senior Vice President, Chief Supply Chain Officer, Molex.
The bottom line for procurement success in 2023 and beyond?
Companies that recognize procurement’s strategic value, invest in benchmarking and aligning processes to the right outcomes, and utilize good data will outperform their competitors this year and for years to come.
Want to learn more about winning procurement strategies? Watch our recent webinar, The 4 Pillars of Procurement Success.