Three ways to drive High Performance Procurement
Transforming your procurement team from a cost centre to a strategic value driver is no easy task. It requires a rethink on how you approach data, measurement and communication.
Procurious teamed up with SpendHQ to survey almost 200 procurement professionals to understand their critical performance drivers and measures, and the impact they were delivering. The key takeaway: Procurement teams have some work to do to elevate their value and become more than just a cost center. That requires radically improving how they collect, analyze and leverage data, and how they manage, measure, and communicate their performance.
“While procurement’s influence and impact continue to expand, our research found that poor data hinders the function’s ability to make strategic decisions, drive desired outcomes, and shed its reputation as a cost center. Procurement must ensure it has enough reliable data ‘in the tank’ to enable it to build influence with the C-suite and unlock its full potential,” says Tania Seary, Founder and CEO Procurious.
The research uncovered several data and performance management woes that limit procurement’s ability to make a bigger impact – and that put its reputation, resources and budget at risk. Here are three main challenges procurement teams must conquer to stay relevant in today’s fast-changing market, based on our latest research with SpendHQ.
Data Reliability and Accuracy: A Critical Imperative
Procurement operates in a dynamic environment where timely decision making requires fresh, accurate and reliable data. Unfortunately, a staggering 75% of procurement professionals lack the capability to refresh procurement data daily or in real-time, and another 75% have doubts about the accuracy of the data they report.
This lack of data confidence and reliance on outdated information poses a significant challenge to high performance procurement. Not only do data issues hamper procurement’s ability to respond promptly to market changes, identify cost-saving opportunities and mitigate risks, but they also undermine trust among non-procurement executives. If the data can’t be trusted, it can be used to make critical business decisions.
“Poor data makes it harder to gain credibility and influence internally,” said Scott Macfee, CEO at SpendHQ.
Procurement’s data problem stems from a lack of systems, technology and processes. Investing in modern procurement technologies and real-time data visibility is the key to breaking down this barrier and gaining total spend visibility. By leveraging real-time data, procurement teams can make more informed decisions, drive performance improvement, and gain a competitive edge.
Collaboration: Breaking Down Silos for Success
Total procurement impact requires tight collaboration with various stakeholders across the enterprise. While there is often strong collaboration between procurement and finance (67% of respondents cite they collaborate often), the research found a significant gap in collaboration with other business units. Forty-three percent of all procurement teams never or rarely collaborate with manufacturing on performance and outcomes, while 39% never or rarely collaborate with sales and marketing.
“The lack of collaboration is eye opening considering the renewed pressure around product and service quality, brand, and reputation, and the perennial mandate to drive cost savings,” said Prashant Bhatia, Chief Marketing Officer at SpendHQ
To enhance procurement performance, organisations must foster a culture of cross-functional collaboration, break down silos, and encourage open communication. By involving key stakeholders early in the procurement process and aligning goals and objectives, and putting more robust procurement performance management systems in place, procurement can better understand the needs of other departments and contribute to their success.
Technology Adoption: The Power of Procurement Performance Management
Technology plays a pivotal role in enhancing high performance procurement and transforming it from a cost center to a value driver. Yet only 21% of procurement teams have adopted dedicated procurement performance management tools to enhance their own performance reporting and project management capabilities. Further, 74% of procurement teams still rely on spreadsheets and ad-hoc methods for tracking key performance indicators and metrics. Poor adoption of procurement performance management software and practices hampers the ability to gather real-time insights, identify trends, and measure progress against targets.
“Finance, sales, marketing, operations… every other department has technology to manage projects, data and performance. Yet procurement still operates out of spreadsheets. The ability to see and understand your data and actively manage initiatives, in a single platform, is table stakes for making smart decisions, confidently measuring impact, and creating more value,” said SpendHQ’s Macfee.
Dedicated high performance procurement management software helps organisations gain a comprehensive view of procurement activities, track key metrics, generate insightful reports, and most importantly, act on the data they collect – making it easier to drive strategic initiatives, innovation and value. These tools enable teams to identify inefficiencies, optimize supplier relationships, and streamline processes.
Procurement’s Next Frontier
To drive high performance procurement and elevate its value, organisations must prioritise data accuracy, invest in dedicated procurement performance management solutions, foster collaboration across business units, and leverage technology for real-time insights. By addressing these challenges and adopting effective performance management practices, procurement teams can unlock their full potential, make informed decisions, and deliver significant impact in today’s competitive business landscape.
Want to learn more how procurement can expand its influence and impact with high performance procurement? Download the full report.
