Many companies today are beginning to understand the power Procure-to-Pay (P2P) can yield as part of their business strategy, and Procurement is now becoming one of those ‘hot’ business functions. Procurement has traditionally been viewed as a cost center – having to manage supplier relationships through RFX’s and purchase order amendments. The procurement journey refers to the evolution Procurement has been going through, from a passive ‘cost center’ to an active contributor. The procurement journey is also known as Procurement transformation or Procurement re-invention. The Procurement journey helped companies to drive better decisions and make sound business choices as well as reduce costs.
The Procurement process involves the Procurement team (procurement professionals) working with business units and other internal stakeholders such as finance, legal, etc. The procurement Journey refers to the different processes involved in Procurement transformation – from Procurement strategy formulation to Procurement execution, monitoring, and tracking benefits realization.
Procurement professionals typically work with multiple stakeholders to define business needs, identify potential savings opportunities, create detailed specifications, and select qualified suppliers. Procurement professionals also monitor supplier performance and compliance as well as contract renewals or negotiations for cost reduction.
The steps in the procurement journey are :
Procurement Strategy & Alignment
Procurement organization design and planning
Procurement process reengineering, automation, and modernization of Procurement processes
Procurement supplier relationship management (processes, people, technology)
Procurement productivity & performance management (roles, rewards & incentives) to align Procurement objectives with business goals
Procurement effectiveness & efficiency (internal controls, fraud prevention, compliance)
Procurement talent management (training, recruiting, learning, and development).
The Procurement journey process may take months or years to complete depending on the size of your Procurement team. The end goal is to work your Procurement function from a cost center to a business driver. Procurement professionals should be involved in strategic decision-making and help drive savings and revenue growth for their organization. Companies need to take steps to restructure Procurement processes, invest in technology and people (training & development) as well as create an effective Procurement workflow. Procurement needs to add value and take a proactive approach toward supplier management. Procurement must help the company reduce costs or improve the quality of products/services while enabling innovation that helps grow the business.
Procurement professionals should also expect to focus on key Procure-to-Pay (P2P) activities such as Procurement process automation, Procure-to-Pay integration, management of supplier costs & contracts, spend analysis, and reporting Procurement KPIs, etc.
The Procurement transformation journey can help companies achieve better business results through improved processes.