A year in Asia-Pacific: Reflections on the world’s most innovative region

Innovation and procurement in Asia

Procurement Leaders opened its office in Singapore last year and my posting here has given me an opportunity to work with the local procurement community and learn more about their businesses and the unique challenges they face.

 

The Asia-Pacific region is becoming increasingly pivotal to almost all multinational corporations. Large and dynamic populations are shifting the world’s economic centre of gravity ever eastwards. It is the spirit of entrepreneurialism and dynamism that is not only transforming national economies but is also leading companies to redefine both the nature and value proposition of their procurement functions.

 

In no other region is the pressure and demand for new approaches to purchasing more keenly felt. The availability of a nearby pool of technology startups and an openness to new management techniques is forging an entirely new type of function in the region. Procurement teams are being challenged on their past reliance – and perhaps even overreliance – on rigid frameworks and unbending policies.

 

Siemens, for example, is challenging the function’s traditional focus on procurement processes, a frequent stumbling point in stakeholder engagement, as part of a regional transformation.

 

The team is looking to elevate the role of technology to meet its international customers’ needs.

Business partnering

As procurement continues to redefine itself, the function’s need to partner with the business provides a single driver throughout a range of sectors.

 

This requirement has led many organisations to pioneer new operating models. Procurement Leaders sees Australian companies, in particular, leading the charge here. At our event in Melbourne, we learned that several organisations moving towards the use of business-partnering models – that is, an operating structure where dedicated staff are tasked to liaise between procurement and internal stakeholders.

 

These members of the team act as internal management consultants and look to package comprehensive solutions from a range of category or operational teams to meet the business’s requirements.

 

Lean organisations, for which such positions are budget-busting, are innovating with business partnering approaches. That is, they are tasking their leading category managers to take responsibility for completing a project and connecting internal procurement pieces on behalf of the stakeholder.

 

This allows stakeholders to enjoy a ‘hands-free’ procurement experience and focus on outcomes. Some argue that this should have been the role of the category manager in the first place but, for those more pragmatically minded CPOs who are looking to make an immediate impact in terms of adding value, these new models may provide a faster route to market. It is that impetus to quicken the pace of execution, which is also leading many to explore agile methodologies.

Agile

The meaning and value of agility have been the subject of an ongoing discussion among procurement executives throughout the region. Not only are teams using formal agile project management techniques, but they are also thinking about how procurement professionals can embody more agile characteristics in their interactions with colleagues. Air New Zealand has looked at the way in which it could unlock agile technology programmes to more ably compete, as well as lead the pack in offering customers a more tailored experience. Being more open-minded and responsive to new technologies has the potential to allow the function to harness disruptive energies to positively recast procurement models.

 

The challenge in this region – as with many others – is the presence of procurement talent willing to make the transition into an entirely new way of working. The Commonwealth Bank of Australia, for example, found that an underlying mindset inclined towards responsiveness and customer-focus was essential to the effective adoption of the formalities of project management as it transitioned to more agile ways of working. Ultimately, the people who are prepared to make the jump determine the success of these initiatives. Those companies that are first to access this talent, will ultimately be the fastest in delivering business value and innovation.

New technologies

Another eye-opening aspect in the region is the degree to which companies are adapting and applying new and emerging technology. Robotic process automation, blockchain and IoT solutions are the forefront of regional CPOs’ minds as they look to unlock local potential to solve persistent issues. Hong Kong, Shanghai and Singapore are major startup hubs, and local governments are offering generous resources to those brave enough to take the plunge. As a consequence, the region is attracting some of the world’s brightest minds to convert revolutionary ideas into business solutions.

 

Thailand, for example, is one of the world’s leaders in deploying blockchain applications to its economy. This is empowering local companies to harness the technology in their own operations.

 

Siam Cement, meanwhile, is using blockchain in its procure-to-pay processes, an innovation it believes has improved efficiency by 50%. The potential of these new technologies may be to entirely leapfrog the years of painful implementation for conventional enterprise resource planning solutions.

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.