What Does it Mean to Engage in “Strategic” Procurement?
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In late 2019, the Harvard Business Review published an article titled Reimaging Procurement with a Strategic Lens that began with this introduction:
“Procurement executives are facing extraordinary new opportunities to be at the forefront of global business transformation. Digital tools are revolutionizing the way that companies develop, make, and distribute their products and services.”
Just a few months later, we would learn how prescient this statement truly was. The COVID-19 pandemic changed the way that companies do business; and, now that we are a full year into the “new normal,” it is clear that many of the changes companies were forced to make are here to stay.
Given the extraordinarily rapid rate of change to which companies have been forced to adapt during the COVID-19 pandemic, it is worth asking the question, “What does it mean to engage in ‘strategic’ procurement in today’s business environment?” While companies were initially forced to scramble to remain operational during the pandemic, that phase has passed, and now it is time for companies to focus once again on how they can efficiently and effectively deploy their resources to establish a dominant market position.
Focusing on Strategic Procurement in 2021
So, when it comes to procurement, what strategic considerations should guide companies’ operations in 2021? Here are some of our thoughts:
• Digital Solutions are Here to Stay. If there was any doubt, the COVID-19 pandemic has made clear that digital solutions are here to stay. While in-person meetings and sales visits will still take place, the procurement process itself is going digital, and procurement efforts need to focus on digital solutions that meet the demands of today’s economy.
• Analytics Should Drive Procurement Decisions. Given the shift to digital, companies now have more data available than ever upon which to base their procurement decisions. Companies that use analytics to make informed and strategic procurement decisions will be at a significant advantage over those that rely on other means of decision-making.
• Technologies are Evolving Rapidly. The rate of evolution in technology is also reaching unprecedented heights. From a strategic procurement perspective, this means that companies must be careful to ensure that the digital solutions they license and acquire come with built-in capabilities (and cost) for over-the-air updates and successor platforms.
• There is A Lot of Competition for Your Company’s Business. From Silicon Valley startups to blue-chip companies with operations around the world, today there are more vendors than ever competing for your company’s business. For procurement executives, this means not only that there are many different options to choose from, but also that there is negotiating leverage available.
Speak with a Strategic Procurement Consultant at Mithras Investments
Do you have questions about how your company should be strategically managing its procurement operations in 2021? If so, we encourage you to get in touch. With offices in Miami, we provide data analytics and strategic procurement consulting services to companies throughout the United States and worldwide. To discuss your company’s needs in confidence, give us a call at 305-517-7911 or contact us online today.