Procurement’s New Roles In Risk, Legal And Finance

It’s no secret today that procurement is not what it used to be. Where once a paper-heavy cost center stood, now stands, in many businesses, a strategic hub of cost savings and key business partnerships. It’s a trend that’s shaped the procurement world for only a couple years, but already, digital procurement and source-to-pay services have ramped up technological innovation in this area.

So, when source-to-pay firm SciQuest compiled the responses of its latest survey, released last week, it didn’t come as too much of a surprise to CEO Rob Bonavito that 60 percent of procurement professionals agree the role of procurement is “evolving” as it works in collaboration with other parts of the enterprise.

The survey also found that 72 percent of procurement professionals said they are either already using, or plan to use, spend analytics technology to assess supplier visibility and help make overall business decisions.

“Companies are really starting to look at procurement as a profit center,” Bonavito recently told PYMNTS, “and an area that they have to have 100 percent confidence in, that it’s being run efficiently and that they’re gaining all of the value that they possibly can gain.”

But the role of procurement isn’t just evolving anymore; it’s growing. SciQuest’s research found that the procurement function is now weighted by new responsibilities, including becoming involved with the company’s financial decisions, playing a role with legal services like compliance and helping to mitigate risk to which a corporation is exposed.

“Contract management, contract negotiation, contract compliance across your supply chain — it’s a critical component of every business, and it’s requiring more focus,” he said. “It’s affecting companies’ bottom lines.”

Much of that, Bonavito explained, stems from strategic sourcing and supply chain management, which opens a business up to new, global possibilities and partnerships — but a lot of risk, too.

“If you don’t have an efficient supply chain, you’re not able to manage it quickly and cost effectively. You’re at a disadvantage,” the executive noted, adding that supply chains are “critical” to top companies’ success.

But as is so common in business, there are the stragglers that are slow to adopt innovation and automated solutions.

SciQuest’s latest figures show a gap in businesses’ ability to pull procurement into the strategic realm of business processes. Only a quarter of professionals said procurement is a profit center within their organizations, and nearly half did not consider the procurement function as “trusted advisors” to their firms. Clearly, there is a ways to go before some companies strengthen their procurement strategies to the next level.

“Having the tools to better manage, analyze and act on [supply chains] is going to put them in a competitive situation,” Bonavito stated. “Some companies don’t think that’s an important area, and they’re going to suffer.”

The results of SciQuest’s research are promising overall, the executive said, reflecting a broad understanding of how supply chain management, strategic sourcing and eProcurement technologies can elevate the success of a firm. Looking at 2017 and beyond, the CEO noted, organizations will see more interest in how to take advantage of the evolved role of procurement and are likely to continue placing broader responsibilities on the function. And, looking ahead, predicted Bonavito, those organizations that are able to go with the flow of innovation will be the ones to survive.

“If you look at companies and how they evolve over time, they have to reinvent, and they have to innovate, or they die,” he warned. “If you look over the last 30 years, you see companies that innovate and reinvent themselves and continue to evolve. And then, you see companies that don’t.”

With the procurement space in so much flux, being able to evolve alongside a more strategic procurement function is part of this effort, he added. “With supply chains and procurement, there is an opportunity for improvement,” he said. “There is an opportunity for companies to reinvent themselves, and that’s going to be the driving force going forward.”