How could paying to watch your favorite show on Amazon affect how corporate procurement departments function?
Wait a moment before replying “it couldn’t.”
Digital Trends in the Corporate World
As consumers become increasingly attached to the world of online purchasing – from paying to watch a show on their favorite streaming service to shopping for a new appliance – they bring expectations built from this on-demand life into their corporate roles.
“It’s the end of buying and selling,” says David Clevenger, an eight-time Supply & Demand Chain Executive Pro to Know. “Over the course of the last century, buying became the science of squeezing price, sales became the art of justifying price, and both functions grew into large organizations. But business is getting too complex and dynamic for centralized buying and selling machines.”
What does this mean for indirect procurement departments, especially considering the following?
- Strategic sourcing is waning in effectiveness.
- Internal procurement departments are being outsourced at an unprecedented rate.
- There is a discrepancy between the value procurement claims and what the CFO sees on the bottom line.
What's The Resolution?
Procurement has some opportunities to combat this on-demand culture. While they are being tasked to increase ROI despite diminishing headcount they also have more opportunities to locate cost savings for their non-strategic spend - freeing procurement up to focus on more strategic buckets. While uncovering new savings in previously unmanaged areas of spend procurement will be proving their distinct value to stakeholders across the entire organization. Working with a group purchasing organization (GPO) can allow procurement the time savings necessary to take on these areas of spend while providing contracts that are pre-negotiated and leveraged to achieve greater savings than would be possible in a DIY model.
Read this article from Spend Matters outlining 3 ways (outside cost savings) procurement can prove their value.