When asked about the relationship between procurement and supply chain management, laypeople often produce a perfunctory answer. They only see the procurement organization as a back-office function whose role in managing the supply chain is to deliver consistency and control over spending processes.
Those who encounter procurement infrequently, such as making a one-off purchase request, may view procurement as a necessary evil. “Of course we need to manage our spend,” they might say, “but why can’t I just buy what I need when I need it?”
In reality, procurement and supply chain management are intricately connected. Those who are in the know recognize procurement leaders as buyers, planners, category leaders, contract negotiators, developers of strategic suppliers, financial stewards, and risk managers.
For many organizations, procurement teams have become the humble heroes who have kept the wheels of industry turning during these challenging times. They’ve identified weak spots in the supply chain, alerting stakeholders to impending challenges. They’ve aided the CFO in managing cash and improving working capital. They’ve driven corporate ESG initiatives into a broad base of suppliers, and they’ve responded quickly and with agility to ensure supply when sources slowed down or dried up completely.
Becoming a hero in the context of procurement and supply chain management
Procurement’s visibility within the executive board room may be at an all-time high, and its contributions have led to even higher expectations. Many procurement teams are embracing this momentum to deliver much-needed initiatives to improve operational resilience across their supply chains.
I recently participated in a fireside chat during the Americas Procurement Congress with James Westgarth, Senior Director, Procurement Performance, Systems & Excellence at Lufthansa. He was too modest to claim the “hero” title in the context of procurement and supply chain management, but what he shared with the audience regarding Lufthansa’s procurement team’s response to the COVID-19 pandemic is genuinely remarkable. For an organization that was essentially spending one million Euro per hour, the team stepped up to support cash management initiatives while pivoting buying programs to identify new sources and cost savings. James is one of many procurement practitioners I’ve spoken to recently who have embraced agility to keep their businesses running.
Anyone with an interest in procurement webinars should check out the recording of this fireside chat to hear James’ thoughts on resilience, agility, procurement’s role in ESG, and the skill sets required for the procurement teams of the future!
Wear that cape with pride
The multi-faceted aspects of procurement and supply chain risks have become abundantly clear over the last few months. Organizations must become more aware of their supply chain partners and the sub-tier suppliers that make up their extended supply network. And procurement is taking the lead on gaining visibility across risk factors from financials, governance, and location-based risks to environmental impacts, labor practices, and geopolitical issues.
“We didn’t see that coming” isn’t an acceptable answer anymore. In a post-pandemic world (assuming we’ll get there someday), digitalization and the use of data and analysis in planning and risk management have taken on renewed importance for procurement and supply chain management. The whole organization, especially procurement teams, must uncover the hidden risks that could cause ripple effects up and down the extended supply network.
During our conversation, James and I agreed that operational resilience requires agility, and agility requires visibility. Detecting an impending disruption further upstream in the supply chain provides more time to analyze, plan and execute a response. Organizations with deeper and broader visibility of risks across their extended supply networks will be more agile and the most resilient. And they can thank their procurement teams for the heroic work that happens behind the scenes.
Join us! James and I will dive deep into this topic during an online panel on November 18. It will be available on-demand afterward for anyone with an interest in procurement webinars. Click here to learn more and sign up!
In the meantime, for more information on how AI and machine learning can help with procurement and supply chain management while building operational resilience, check out interos.ai.