What makes procurement transformation critical to business? Organizations should prioritize digitizing procurement because of the increasing reported number of global supply chain disruptions, such as geopolitical uncertainties, pandemics, and raw material shortages.
Revamping procurement models is a smart move to maintain resilience, ensure cost efficiency, and enhance operational agility. Companies must adapt by proactively investing in digitalization, supplier diversification, and risk management strategies.
The Need for a Resilient Procurement Model
A robust procurement model has many advantages. The main one is that it enables businesses to respond effectively to supply chain disruptions while continuing what they do best.
However, to do this, companies need to build resilience by assessing their procurement operation structure, supplier relationships, and decision-making frameworks. Companies must integrate new technology, foster supplier collaboration, and ensure flexible strategy sources.
For example: everyone can take a queue at Unilever and Siemens. These companies have successfully redesigned their procurement process. They leveraged AI-driven demand forecasting and real-time supply chain visibility. Such initiatives allowed them to mitigate risks and
optimize costs even in volatile environments.
Key Strategies for Procurement Resilience
Procurement resilience doesn’t happen overnight. It takes time to establish and craft robust strategies. Let’s go through each key strategy to develop resilience when it comes to procurement operations:
1. Supplier Diversification and Risk Management
Overdependence on one supplier or region is a major roadblock to procurement. To eradicate this risk, businesses should build a diverse network of suppliers to address challenges. Apple, for example, has transferred some of its production outside China. This has reduced reliance on a single country and ensured stability in its supply chain.
2. Digitalization and AI-Driven Procurement
AI and machine learning play an integral role in the procurement workflow. Like other industries, these
innovations help with decision-making by providing predictive analytics and real-time data insights. Amazon and P&G are only two of several companies that use AI to anticipate demand fluctuations and automate procurement operations. They can be more proactive rather than reactive in their procurement strategies than ever.
3. Agile Procurement Processes
When there are sudden market changes, procurement agility becomes essential. Flexibility in contract structures and dynamic sourcing models allow organizations to adapt faster. This helps Tesla shift suppliers and navigate semiconductor shortages more effectively.
4. Sustainability and Ethical Sourcing
Resiliency in procurement models also encourages sustainability and compliance. Adapting ethical sourcing practices to ensure long-term procurement operating model stability has guided IKEA and Nestle in meeting regulatory requirements and consumer expectations.
Future Trends: AI in Procurement
It is no secret that businesses should be adaptive, especially regarding the evolution of the procurement process. This helps them remain competitive. Here are some emerging procurement trends to look out for:
1. Many would greatly rely on blockchain for transparent and secure procurement transactions.
2. There would be an increase in the automation of procurement workflows through robotic
process automation (RPA).
3. Expansion of AI-driven supplier risk assessment tools would be prevalent to improve supplier resilience.
4. Rising procurement-as-a-service (PaaS) would become rampant to provide on-demand procurement operation expertise and infrastructure.
Kickstart Your Procurement Transformation
Contact CtrlSpend today on 9642770299 to explore how we can help you build a more agile and resilient procurement model. Whether you’re looking to implement digital procurement solutions or develop a supplier risk management strategy, we can provide guidance to futureproof your procurement processes.
Transform your procurement journey with CtrlSpend today!
