If the human capital is applauded for its efforts and recognised for its contribution, then a plausible intersection between human efforts and procurement can be obtained and the dynamics of procurement can be transformed though a four-step process, suggests Aval. These are
• Planning and designing a talent procurement structure
• Identify, attract and orient new talent
• Managing, developing and cultivating the skills of the existing human capital in the business
• Retaining talent
By identification and orientation of an exceptional talent pool, companies or businesses can aim for higher performance goals and drive the procurement function.
However, there are several challenges that businesses still face in regard to human capital as it is seen as a weak link in achieving and improving the business outcomes. There are several perceptions that form the basis of this analysis.
Procurement is no more about a particular department in-charge of the responsibility; it has now titled towards becoming a decentralised activity with several business units handling their own purchases themselves and not depending on a specific department for it. Companies can arrive at the actual number of people who play an active procurement role by multiplying supply chain, procurement and accounts payable resources with a factor of 10. That is where the problem lies as companies find it difficult to establish a talent management capability that suits all needs for everyone involved.
Another issue with finding and managing procurement talent is with the changing dynamics in a business environment. These have an impact on how businesses look at talent in keeping with their changing needs. In order to strengthen procurement talent management, companies often pursue initiatives such as centreled procurement organisation, training and enhancing skills, enable category management and develop specific reporting structures. If they are launched in isolation and as individual activities, they can waste time and resources of an organisation. A lasting ww impact can be achieved if businesses have a talent-centric approach, secure needed funding and gain executive buy-in.
“Today’s procurement is seen beyond the orthodox model of doing rate negotiation and going with the lowest bidder. Now one is required to possess collaboration skills besides studying deep in sourcing and there are professional courses available like CPSM from the ISM, USA, CIPS from the UK, etc. These courses help in visualizing procurement globally and setting leading industry practices,” adds Verma.
Global Trends
“Integrated digital platform, Consolidation, Leveraging local talent and expertise and making diversified global team, Outsourcing low touch procurement, Setting center of excellence in low cost countries with better talent, etc. are the notable trends according to Amit.
“The procurement industry is experiencing tremendous change. Advancements in technology, business practices, and consumer demands are driving this change and transforming procurement as we know it”, states Sathish.
“As the global economy continues to upturn, the focus is shifting away from cost savings and more towards strategic investments. The conventional stereotype of procurement professionals as “pencil-pushers” and “number-crunchers” is becoming less relevant as organizations begin to rely more heavily on them to create value rather than respond to cost pressures.”
“Digitisation is undergoing changes owing to e-commerce and consumer habits such that companies are regularly revisiting their IT plans more often. There is still a cloud over where to get started when it comes to digitisation. Though there are no certain ways of figuring out the right framework for going digital, there are certain methodologies that will help figure out digital solutions sooner, “says Aval.
Insights can be collected from sensors, distributed data and connected assets to gather actionable improvements through digital and analytical solutions. The idea is to shift from linear supply chains to nimble and connected networks characterised by a continuous flow of analytics and information. There are short phases that assess the value of certain digital capabilities which help businesses to work on them for a short time and understand how far these will go. Depending on the ones that receive a nod, their performance is assessed and investments continue.
Digital capabilities can be developed through a bottomsup approach and not a topdown mentality. “It is time companies take the help of digital technologies like Artificial Intelligence (AI) and blockchain to sort certain supply chain issues like product traceability,” adds Aval. The idea is to use appropriate technologies only after assessing the gaps in the company’s capabilities. AI can be much more effective if the future vision and goals are in place. A SWOT analysis or strengths, weaknesses, opportunities and threat analysis can help companies to assess supply chain needs.
Though set standards have to be followed in procurement management, each company has its own strategies keeping in mind the workability and profitability.
There can be challenges though. Robust Change Management is one of the critical aspects of facing challenges feels Amit.
Sathish says, “It is crucial to develop a procurement strategy to have better business and purchasing practice. Purchases that are made based on inaccurate data lead to problems like dissatisfaction deliverables, wrong assessment on the requirement itself and delay in deliverables. Just like customer relationship management, a supplier relationship is also crucial for better client relationship and business sustainability.
Some industries set standards to make the specification process easier to ensure there is an easy flow in the vendor and client relationship and deliverables.”
Keith’s view is that traditional process sometimes works best for non-tangible products & services but for normal over-the-counter products the online portals are the most effective. The challenges are putting in the correct requirement scope details & of course, the return policy/damaged products which need to be replaced/ rectified.
Manish states that the biggest challenge is balancing sustainability with profitability. “And that is where organizations like us can and will make a difference. We do things, not because we are asked to do, but because we believe it is the right thing to do. This attitudinal change in the corporate world is slowly and positively coming. We work with like-minded global partners, for instance, EcoLabs and Diversey who have from time-to-time introduced innovations promoting portability, sustainability and high standards of health and safety. In the area of cleaning services, for example, with Diversey, we have moved to using concentrated chemicals. With its accurate dosing and the use of a dispenser for dilution of the chemical on-site, ease of use, tremendous portability, space savings, lesser plastic usage and above all its tamper proof design, we are able to introduce CO2e Savings of 74% which is equivalent to annual greenhouse gas emissions from 1.6 cars or CO2 emissions from 3367.6 litres of petrol consumed. Plastic consumption is estimated to reduce by upto 50% per annum.”
Sustainable sourcing in food service is an important aspect of having a conscience and sustainable business. Thakkar adds, “We believe that our services should benefit our clients and also the community to which we all belong to. Sodexo’s intent to provide fresh, local and seasonal produce to our clients’ sites led us to work with Devnadi Valley Agriculture Producers Company Ltd.
Located near Nasik, the Devnadi Valley Agriculture Producers Company is the first producer company and was established in 2011 with the farmers themselves as the primary stakeholders. Today it has over 1000 farmers spread across 30 villages who are a part of this growing company. The crisis that most small farmers face today is that they don’t have adequate bargaining power to trade their produce, reflecting in their plummeting incomes. Sodexo’s initiative to work with the organization began in June 2019. We support them by buying 40000 kgs of fresh vegetables every month for our healthcare site in SMBT – Ghoti, Maharashtra. Through this, we ensure that small farmers can reap higher and more stable incomes and can continue farming. Besides nutritional advantages, there are savings in transportation costs, less wastage (perishables) and shorter turnaround time.”
A survey conducted on a community of procurement professionals recently found out that only 5% believed digital transformation is knocking on the doorsteps of their business. The rest 95% of professionals believed that digital transformation would change the landscape in the next five years. Interestingly, only 66% of these participants were found strategizing to cope with the future, while the rest had faith that they were capable of braving the changes with their present capabilities.
“Procurement experts believe in order to embrace the change, the brands would have to undergo changes from the digital aspect. This may alter how these businesses conduct themselves, but in order to sustain a futurecompatible business strategy and also to gather the resources for the same, these brands have to overcome the lack of vision,” asserts Aval.
In order to cope with the future, businesses can follow certain rules to shape their business in the years to come: Even if the business is not ready for the digital age, the business must be first aware of the leaps and bounds in the technology that are occurring in its industry. Companies that do not usually embrace technology as a means of delivering productivity must embrace the digital advancements in their respective fields or perish. Also, it is important to focus on skill development and on creating a synchronized team of resources as opposed to expecting a single individual to embrace the bulk of the scope of technological advancements. Businesses have to be transparent to their teams with respect to the business’s vision of the future.
