It’s now well-publicised that procurement has a tremendous opportunity to become a more strategic asset through further collaboration with finance. This has been a common theme in discussions with many CPOs regarding the future of procurement.
Good news: CFOs are coming round to the view that procurement can become a more strategic asset by collaborating with finance. In a recent survey of senior finance executives conducted by CFO Research Services, 73% of respondents said that procurement has become "more strategic-minded" over the past three years.
In this guest post, Procurement Leaders invites Ariba’s Richard Downs to share findings from research into procurement’s relationship with finance.
Technological improvements have greatly enabled procurement to reduce time spent on transactional tasks and better collaborate, both across departments and with the supply base. But skills development has also played an important role.
However, there is significant room for improvement, which translates into a great opportunity for procurement chiefs. Finance leaders highlighted the following areas where procurement has great opportunity to increase its contribution: managing working capital; improving collaboration with suppliers; managing risks to business performance; expanding into new markets or business lines.
So how should procurement proceed?
First, initiate earnest discussions with finance on how procurement can most contribute at your organisation. Next, develop a plan to embed the right analytical and financial skill sets in your department, whether that be through training, new hires or co-locating individuals with finance.
Lastly, determine the right technology to support your strategy; business networks are particularly important in improving collaboration with suppliers, for example.
The fact respondents from companies with a network consistently saw greater opportunity for procurement to meet financial objectives shows how technology can not only get more done, but also change attitudes as to what is possible.
Richard Downs is director, solutions marketing at Ariba, an SAP Company.
This post is taken from Ariba’s regular column in Procurement Leaders Magazine.