Seizing Opportunities with Collaborative Procurement
“The most forward-thinking organisations are harnessing the latest collaboration and business network technologies to transform their processes to support collaboration with internal stakeholders, external trading partners and suppliers.” – Nate Moon, Global Head of SAP Business Network for Finance, SAP.
As a procurement professional, you face a critical decision: Collaborate or stagnate. Collaboration is a strategic necessity that can turn challenges into opportunities. Building relationships with internal stakeholders and suppliers gives procurement teams a competitive edge to navigate ESG requirements and constant supply disruptions, manage costs effectively, accelerate time to market and outmanoeuvre recession risks.
Collaboration has the power to be your secret weapon against daily challenges and drive significant benefits for procurement teams and organisations as a whole. Here’s a closer look at how collaboration can empower procurement to thrive in a complex landscape:
1. Meeting ESG Requirements
Businesses are facing increasing pressure to prioritise sustainability and demonstrate corporate responsibility. Environmental, Social, and Governance (ESG) standards are also evolving, complicating an already challenging regulatory landscape. Companies with strong ESG practices can achieve up to 20% higher profitability, but effective collaboration is the key to successful ESG initiatives.
By working closely with sustainability and compliance teams, procurement can ensure that ESG initiatives and policies are ingrained into procurement practices and align with the organisation’s broader sustainability objectives. For instance, Unilever’s Sustainable Living Plan, which involves close collaboration between procurement and sustainability teams, helped the company reduce its environmental footprint while delivering consistent financial performance. Building strong relationships with suppliers also helps procurement teams promote sustainable practices across the supply chain. For example, procurement teams can collaborate with suppliers to source eco-friendly materials, reduce waste, and implement energy-efficient processes.
2. Navigating Supply Disruptions
Supply chain disruptions can come from any angle – geopolitical uncertainties, natural disasters, pandemics – you name it, procurement teams have dealt with it. A survey of 1,000 supply chain executives by Oxford Economics in partnership with SAP found that 43% of organisations expect geopolitical changes to have a negative impact on their ability to deliver high-level customer experiences. The key to ensuring business continuity and customer satisfaction when these issues arise: effective collaboration.
Internally, this means working with other functions outside of procurement to develop contingency plans for if/when a disaster strikes. Together, you can identify potential risks, evaluate alternative sourcing options, and establish protocols for quick response in case of disruptions.
Externally, maintaining open lines of communication with suppliers is key to understanding their capabilities and challenges. Armed with this knowledge, procurement teams can make informed decisions and develop strategies to address supply chain vulnerabilities.
3. Accelerating Time-to-Market
In a competitive market, the ability to bring products to market quickly can be a significant advantage. Collaboration across departments and with suppliers can streamline processes and reduce time-to-market. Working with R&D, marketing, and other departments ensures that procurement is aligned with product development timelines and market demands. This alignment helps in sourcing materials promptly and adapting to changes in product specifications. Suppliers can also provide valuable insights into material availability, lead times, and potential cost savings, which helps accelerate the overall development cycle.
4. Managing Costs and Combating Inflation
Cost management is and always has been a top priority for procurement teams. But now the stakes are higher, driven by economic uncertainties and inflationary pressures. Over half of CPOs cited inflation as their top risk in a Deloitte study last year.
Collaboration can play a key role in optimising costs and mitigating financial risks. Working with finance and operations teams to analyse costs and identify areas for improvement is essential. This collaborative effort can not only help to uncover cost-saving opportunities, but also to negotiate better terms with suppliers, and optimise resource allocation.
Collaborating with suppliers to explore alternative materials, bulk purchasing options, or innovative sourcing strategies can also lead to significant cost reductions. Procurement teams can leverage their supplier’s expertise to find cost-effective solutions that meet quality standards.
5. Enhancing Cash Flow and Invoice Management
Efficient cash flow management and timely invoice processing are critical for maintaining financial stability. Working closely with the finance team to align procurement activities with cash flow requirements helps in managing working capital effectively. This includes planning for large purchases, negotiating payment terms, and forecasting cash flow needs.
Collaborating with suppliers to establish clear invoicing procedures and payment terms ensures timely and accurate invoice processing. Implementing electronic invoicing systems and automating approval workflows can further enhance efficiency. For example, with the help of SAP, Brückner Maschinenbau was able to streamline order processes and significantly automate order confirmations and invoice documents, resulting in the company being able to process triple the amount of orders with the same number of staff.
Collaboration – More Than Just a Buzzword
In an era characterised by rapid change and uncertainty, the choice between collaboration and stagnation is clear. By fostering strong relationships with internal stakeholders and suppliers, procurement can transform challenges into opportunities and drive organisational success.
To illustrate the power of collaboration in procurement, Procurious, in partnership with SAP, has launched a new research survey, with the goal being to arm you with the information you need to seize opportunities in collaboration.
What’s the current state of collaboration within your organisation or outside your four walls? We want to know.
For every response submitted, Procurious will donate $10 to Save the Children to support their mission to keep children safe, healthy, and learning.
