What are the key issues if concern to procurement managers for 2019?
Graham Crawshaw of CASME, a membership association of global procurement professionals, recently published his list of six key issues on the web site of CIPS, basically the UK version of the USA's Institute for Supply Management (ISM).
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Crawshaw ased ssembled his list based a series of roundtables across the globe with CASME members.
There are no real surprises here, but the six top issues make an interesting read nonetheless.
1. Risk management
Risk is always a key concern for procurement, with the primary focus on suppliers' financial status, followed by health and safety and industry practices. It's no longer good enough to simply engage with your tier-one suppliers. Emphasis needs to be paid to controlling the approach taken with tier-two suppliers, ensuring that the necessary obligations are passed down to subcontractors.
2. Reputation and brand image
It's not difficult to recall allegations of child labor in the overseas supply chain of certain retail brands, or issues around modern slavery both at home and abroad. The knock-on effect can be disruption to brand and public image and ultimately an impact on profitability. The Modern Slavery Act goes some way towards addressing this, but issues remain around compliance.
3. CSR
Can procurement ever be sustainable? Organizations are making tremendous progress in the approach to direct materials, but indirect procurement is more complex. The level of auditing required to ensure that practice are sustainable, including those of first and second tier suppliers, is labor-intensive and time-consuming. Consider asking suppliers to complete detailed questionnaires and take positive action with the results. Many organizations now issue written codes of conduct, but the key challenge is acceptance and practical application in the supply chain.
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4. Becoming a customer of choice
Innovation is often included in an RFP, but does not necessarily specify what is really needed. Supplier innovation is more likely if you become a customer of choice. A recent CASME survey highlighted that a simple constraint to achieving this is late payment of invoices. Innovation is a two-way process; don't just write it in a contract and expect the best ideas from suppliers. The most successful approach is to abide by agreed payment terms, and demonstrate a partnership approach by listening and responding to suppliers' ideas.
5. Centers of Excellence
The trend towards a centralised organisation to support the procurement function is on the rise, with an emphasis on provision of spend data and analysis, plus RFx e-sourcing support. What is the best approach to organizing the CoE's structure, work responsibilities and operation to ensure the business is supported? A virtual CoE may be an appropriate solution; however, a complete software package, beyond the capabilities of Microsoft Excel, is needed for centralising and recording the CoE's activities.
6. Stakeholder engagement
At almost every one of CASME's meetings held each year, the discussion includes procurement's need for achieving greater connections with stakeholders. Recent benchmarking studies show that more CASME members are now profiling and prioritizing stakeholders and their requirements, in order to plan the right type of communication – for example, whether a particular stakeholder needs an occasional meeting over coffee, or a formal monthly one.
CRM tools can be used to track the relationship building activities and supplier onboarding. Credibility can be gained by using the right terminology, and by demonstrating knowledge of the category, suppliers and market trends. By aligning procurement activity to the stakeholder's business objectives and selling the benefits of collaboration, the overall result can be more valuable than cost savings alone.
It's a good list – how does it match up to yours?
What would you add to this list of top procurment issues for 2019? Let us know your thoughts at the Feedback section below.
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