Three insights from SAP Ariba Live 2019

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In June 2019, more than 2,500 attendees gathered at SAP Ariba Live and SAP Fieldglass Summit in Barcelona, Spain, to discuss sustainability, the function’s talent requirements and the future of procure-to-pay (P2P), among other topics.

 

Here are three key takeaways from the event.

 

Sustainability is no longer a choice; it’s a mandate

Sustainable, efficient and inclusive supply chains are more vital today than ever. However, Procurement Leaders’ CPO challenger guide 2019 shows that supply chain sustainability is not among CPOs’ top 10 priorities for 2019, and barely makes the top 10 for 2020. This highlights a lack of focus from not only the procurement function but also the wider organisation when it comes to improving supply chain sustainability.

 

According to speakers at the SAP Ariba event, external pressures will result in procurement teams optimising supply chains as they drive sustainability across each tier. Potential pressures will include:

  1. Tighter regulations requiring manufacturers to use cleaner materials.
  2. Investors, who are 13 times more likely to buy a stake in organisations that operate ethically or have strong corporate social responsibility principles.
  3. As more companies foster their own supply chain ecosystems, they are likely to collaborate with organisations that value sustainability.

Procurement teams must demand more of their suppliers in terms of sustainability, assessing their performance against the United Nations Sustainable Development Goals (UNSDG), or even including compliance clauses in request for proposals to learn upfront which suppliers share your sustainable efforts.

 

Organisations operating with unsustainable supply chains are less likely to attract potential investors, negatively affecting their own reputation. As a result, it is critical CPOs include sustainability in their top 10 priorities for 2020 and start thinking of adopting a sustainable supply chain to futureproof their organisation.

 

Finding the true value in end-to-end procure-to-pay

The average number of adopted P2P solutions by procurement is 2.7% compared with 1.4% in 2014 (source: Procurement Leaders Data & technology, 2018). At SAP Ariba Live 2019, it was evident many organisations that have deployed P2P technology solutions struggle to leverage the data they have captured. In an interview with Vish Baliga, CTO, SAP Ariba & SAP Fieldglass, he discovered organisations that deployed P2P solutions without redesigning their processes and cleaning their data beforehand failed to find value from their deployed solution. What should organisations that have deployed or are thinking of deploying P2P solutions do to find true value?

 

First, procurement executives start with in-house data cleansing by:

  • Identifying where all contracts are stored or located.
  • Uploading supplier details into the source-to-pay solution.
  • Tracing transactions to account payable and trace account payable to suppliers.

Second, procurement executives structure (standardised) contracts and partner with IT to store and align the contract data to downstream solution so the solution can leverage the data.

 

There is an urgency among procurement to find value in deployed P2P solutions. Most organisations with P2P solutions are unable to derive insight which to deliver business value. Procurement being the function responsible for implementing P2P solutions within the organisation is under immense pressure from the upper management to rectify this issue. To find value from P2P solutions, procurement should collaborate with IT in data cleansing and contract standardisation to align spend to contracts.

 

Building talent for the future digital procurement industry

Some 37% of procurement executives in attendance expressed an interest in adopting ecosystem platforms or networks to improve business operations. This means category managers will need new skills for managing categories via an ecosystem network. At the event, executives wanted to know what kind of team and skills are needed for a procurement function digitally transformed by adopting an ecosystem platform?

 

In an interview, Dr Marcell Vollmer, chief digital officer, SAP Ariba & SAP Fieldglass, advised a robust method to build a team for any digitally transformed procurement function. His method is as follows:

 

Procurement executives must start by collaborating with C-suite executives to define a digital vision for the business, align the procurement function’s operation to the vision, redesign procurement processes for the vision, adopt IT infrastructure and technologies for the vision. They can then build the team on the backs of these outcomes.

 

To upskill the team, procurement functions need to partner with external institutions to develop in-house courses to cover topics such as:

  • category management;
  • negotiation;
  • relationship management;
  • design thinking;
  • analytics;
  • algorithms;
  • market insight; and
  • change management.

CPOs must build the right team to futureproof procurement. More than one-third of procurement executives expressed interest in adopting ecosystem platforms or networks to improve business operations, which is possible through digitalisation. If CPOs are serious about protecting procurement from digital disruption, it is critical that they invest more resources in building the right team and skills for the function to be a dynamic and valuable ecosystem partner.

Richard Olaiya
Posted by Richard Olaiya

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