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Today the procurement function faces a longer list of tougher challenges than ever before. Long gone are the days when a CPO could get cost savings targets signed-off and then put his or her feet up. Now the function is being challenged to deliver far more than just savings; it needs to tease cutting-edge innovations out of the supple base, deal with global risk as well as manage sustainability and supply chains that stretch into the furthest reaches of the globe.
This ultimately boils down to teams delivering more value, beyond just traditional cost savings and that requires a leap in how the community sees its role in coming years.
For Tony Roberts, director of procurement at construction business Lafarge Tarmac and chairman of the Procurement Leaders Masterclass session in Zurich, driving innovation out of the supply base and collaborating with suppliers is one of the most important challenges facing his function and the wider community.
Roberts told those gathered that he forsees a continued change in the marketplace, one where the price battle is over; there are increasing levels of risk; customers are increasingly demanding; and the expectations of procurement have been raised. The answer to all these challenges, Roberts said, lies in collaboration and innovation both internally and externally.
However, in order to achieve this he says procurement chiefs need the right team in place, one that has the skills to be able to identify and capture the latest innovations. They need skills beyond those associated with a traditional buyer. Leaders also need teams that can build trust both with suppliers and internal stakeholders – as well as making sure to recognise and reward when significant value that is delivered.
But, importantly, a developing function also need to pick the right suppliers to go on this journey with, ones that can rise to the challenges that will inevitably be faced.
One company that has made significant endeavours in this space is consumer goods giant Unilever. With 160,000-odd suppliers it hasn’t been easy, but the company is now seeing around 70% of the latest innovations coming into the company coming from suppliers.
The success, said Henk Sijbring, VP procurement packaging at Unilever, in his presentation at the Masterclass, is down to its Partner To Win programme. The team has spent time segregating the supply base, finding those strategic suppliers who can add the most value; it then formed Joint Business Development Plans with those suppliers. These are formal agreements which state goals, aspirations, governance, allocation of resources and objectives in one single document.
But the process doesn’t stop there. There is an annual Partner To Win event, attended by senior managers and suppliers, while the presentations are all available for the rest of the company to view on demand.
Innovation may require investment and progressive thinking but it gets the attention of the business and is a crucial step in maintaining a competitive function.
Which begs the question, what are you waiting for?
You can stay up to date with all the latest news and insight from the Procurement Leaders Zurich Forum on the 15th October on the liveblog: www.procurementleaders.com/liveblog