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Any type of business should set up procurement productivity and flexibility as top significance for enabling its industrial goal in the field of trade they operate in. Understanding that industries in construction and engineering, production, and manufacturing, including supply chain management and corporate have a bigger role to play towards business sustainability and profit gains to keep the business afloat, while the business performs to the best of its ability through competitiveness.

Driven business solution with thriving goals and success is based on solid business development with the aim to achieve the best results and great profit margins.

Looking at how business thrives against all odds, the business entity needs proper and viable business solutions which will enhance productivity and create more business opportunities for the enterprise to be sustainable throughout its success.

In this sense, procurement transformation and agility should be essential to any business strategy to deliver cost savings, use transparency, and optimized working capital as there is a massive opportunity to attract new clients in corporate, industrial, manufacturing, government, mining, retail, SMEs and construction sectors as these businesses are always evolving.

 At most, organisations recognize the need to improve procurement agility and flexibility in their processes, it is quite essential to start by breaking walls of rigidity and offering great service with the end customer in mind through flexible means to deliver the best compared to your competitors. In terms of becoming agile, it is worth noting that this is more about flexibility, despite changing all processes and procedures which had been in place prior. 

Through your business work ethic and professionalism, it is essential to provide a viable agile procurement for various top and small clients which have an appetite to partner work with you in the business model you are engaged in.

Your business model needs to present customers and potential customers in an effort to find the weak and strong areas of your products and services.

Ways to break rigid processes and improve procurement agility:

1.      To adapt to business needs through courage and long-term goals, sometimes a rigorous process can be a holdup towards delivering business requirements in an effective and efficient manner, hence moving beyond prediction by getting to understand agile procurement by means of time-saving and applying cost-saving measures for the benefit of the business.

2.      It is quite crucial to have a swift reaction towardsresponding to important changes with supplier relationships to keep a competitive advantage over rival companies, as that is the way to go to be ahead of others. 

3.      Adopt the Kaizen approach of continuous process improvement – as globalization has influenced organisations to respond differently from the traditional ways of doing business and the initiation of technology solutions also forces businesses to catch up with the latest trends for sustainable business growth. Procurement can be a support function that moves with the business requirements by encouraging digitization and computerization to become a vehicle to drive continuous improvement faster towards bringing positive and desirable results at great times to beat deadlines and avoiding failures of producing the best outcomes for the business. 

4.      It is vital to Introduce process enablers, with the aim of having sustainable human capital and tools of the trade, while understanding that procurement leaders are the custodians of developing policies, procedures, and processes, and in that sense, the acquired solid team of human capital and tools of trade will enhance the production and bring sustainable results towards your business. The intention is to ensure corporate governance is necessary for a healthy business however where there is a need to adapt urgent process requirements, there should be a room to craft meaningful processes for enablers to support immediate product deliveries requested by businesses to respond to markets demands, fast approvals sequences and vendor onboarding processes as a niche to always stay competitive.

5.      For procurement agility, you need to have flexible procurement leaders to look into bringing value in your procurement through data analytic systems, digital transformation, value-driven ideas, and skilled procurement personnel including proper service delivery to the satisfaction of the client. Flexible procurement leaders’ role becomes important towards the capacity building from the early stages of demand and supply engagements to ascertain cost measures, mitigate supply risks and not be afraid to find sources of supply through collaborating with suppliers that might be difficult to respond to business needs, however, it is wise to look at alternative service providers to avoid the disappointment of losing clients based on lack of urgency and applied strategies which needed to be put in place to safeguard your business operations and success.

According to the research conducted by the Hackett Group, which is a leading international strategic consultancy firm, digital transformation has enabled world-class procurement organizations to achieve greater efficiency, effectiveness, and a higher return on investment.

 In terms of making a procurement organization be world-class and effective, theHackett Group research states that there are five strategies that are viable to envisage the success and progress of your business.

1.      Re-allocating resources from transactional focus to value-adding activities:

GlobalProcurement organizations falter when they devote much of their attention to transactional work and pay little attention to strategic activities. Value-adding activities include analytics, performance management, and devising purchasing strategies.

2.     Digital transformation:

World-class global procurement organizations spend more per full-time equivalent (FTE) due to greater investments in process automation. The three critical steps in enabling digital transformation are creating a procurement technology strategy, partnering with the information (IT) group, and creating a technology road map that defines the desired strategic outcomes, key performance indicators, and needed behaviors.

3.      Analytics-based decision-making:

By spending23% more on technology per FTE, world-class procurement organizations invest a higher proportion of systems and tools to enable analytics capability. Data should be used beyond reporting to solve more complex business needs.

4.     Customer-centric service delivery:

Customers must be the focal point of all activities within procurement. World-class global procurement organizations design services and processes, keeping the customer perspective in mind.

This includes service-level agreements with internal customers, the use of non-traditional project teams and skillsets in communication and digital media, and the “voice of customer” recommendations.

5.     Re-skilling the procurement function:

 World-class global procurement organizations employ a more significant percentage of the overall staff for planning, and strategic roles. However, less performing organizations have a greater focus on operations and compliance management.

By focusing on building procurement skills, these organizations invest in talent development, increasing the business acumen of procurement staff; and developing analytics skills.

 It is worth noting that new ways of technology such as data and automation assist a lot through the use of Business Intelligence Dashboards instead of old-fashioned traditional methods used as analytic tools to analyze data for quicker response in terms of getting accurate information that you need based on agile procurement. Investing in more resourceful and innovative ways to adopt data-driven technologies to improve performance and reliable information is the best way to elevate your procurement business strategies to greater heights.

In conclusion, you need to make an impact towards agile procurement through a clear understanding of processes in place and new innovations on how you can utilize the fourth industrial revolution methods to push to the new frontiers. It all takes knowledge and education to get to understand how procurement works. Once you get all the methods and strategies right, you will be on the right path to excellence.

Globalization has had a huge impact on how we conduct ourselves, particularly in our work lives. As a result of technological breakthroughs, there have been major improvements in transportation infrastructure, transforming the world into one global international commercial market. For both new and established entrepreneurs, the global market is ripe with opportunities. The stakes are high, and the risks of failure are considerable; how one manages these risks is a matter of strategic planning, budgeting, and execution.

Both suppliers and buyers benefit from a clear understanding of how best to capitalize on market opportunities. For example, a supplier can submit a competitive quote, the buying organisation receiving the quote will make a decision based on their budget allowance after following a fair and equitable selection process. Alignment in thinking and intended outcomes is how both parties involved make a success of the once-off or long-term business opportunity.

So, how do business enterprises secure a sustainable deal?

Understanding industry insights, its trends, and its financial proclivity is one of the numerous ways enterprises can guarantee that they remain top of mind when decisions are made notwithstanding awareness and gaining knowledge of the desired buyers’ strategic intentions. This chasm is bridged through procurement and the role it plays. Therefore, knowing the cost drivers and strategic initiatives becomes easier and more controllable when a co-dependent alliance is formed, thus budgeting and planning are made easier because the prices are aligned with the desired objective.

As a function, procurement adds value by assisting business to project costs for the next fiscal year, whether through market analysis or a review of the existing contract’s terms and conditions. With this rationale, how then can a business enterprise seek value from their relationship with a procurement professional while simultaneously expanding their organization in an ever-changing global market? Here are a few things to consider:

1.    Understand the market: Keeping up with innovations and technology that make doing business easier is good to offer best-in-class service and delivery.

2.    Demand management: Managing the downstream value chain to mitigate supply risk.

3.    Budget accordingly: Align the budget with the business requirements, considering the Zero-Based-Budgeting (ZBB) methodology where applicable.

4.    Advisory council: Become a trusted business partner that can offer expert advice to the clients, nurturing the relationship to be mutually beneficial for the long term.

The next frontier

Understanding the strategic roadmap and the organisation’s needs is necessary to provide the groundwork for a possible one or five year contractual commitment. Collaboration, planning, forecasting, and negotiation are all necessary components of a healthy and effective procurement partnership. Growth can be sought in any situation; nevertheless, having a diverse customer portfolio is critical to establishing and maintaining a competitive advantage in the market. To build such a diverse portfolio,  business enterprises need to network with key partners who want to drive and achieve the same change and impact. Business enterprises will need to be smart and purpose-driven to capitalize on opportunities brought on by globalization and market trends, especially in the aftermath of a pandemic. Partner for long-term success!

 “The rule says to become world-class at anything, you have to put in 10 000 hours of practice. Practice isn’t the thing you do once your good. It’s the thing you do that makes you good” – Malcom Gladwell.

 For more, follow me on Instagram @Lerato_procurement & YouTube as Lerato Sebata. Information is meant to be shared & I intend on doing just that!

Understanding procurement’s function will save you a lot of back-and-forth emails in the new year!

Many private and public organizations will be reviewing and amending their preferred supplier database now that the new year has begun. Some service providers’ contracts will be extended based on a fair assessment of the previous year’s performance, while others may be inclined to find a new potential supplier as a result of the assessment. What matters for both outcomes are the procurement professional understanding of the scope requirements that the appointed service provider will offer; and, finally, how the incumbent will grow with the company over time, entrenching themselves within the company and meeting the contract objectives.

You might be acquainted with the term RFx process (i.e. Request for Proposal, Request for Quotation, Request for Information) a thrilling email, or phone call that could revolutionize your life and your business after submitting a response to the long daunting RFx request. The thing is, it’s not all bells and whistles — standing out and meeting the tender requirements is just one of the most important parts involved in securing sustainable long-term business success. The truth is, many factors influence the request to partner from a business standpoint, thus being flexible, versatile, and adaptive to new partners is vital in guaranteeing that you demonstrate what you have contractually agreed to do but in so doing, do it better than other competitors. Say it with me: cha-ching!

 Defining what is important

Every business owner wants to grow their company and improve profits, which necessitates reaching out to large corporate organizations and being exposed to varied procurement processes (influenced sometimes by the culture of the organisation). Let me reveal a well-kept secret: Your responsibility is to send proposals in response to an any RFx and convince the buyer that your company is the right prospective supplier to do the job. Further to that it is your responsibility to make the buyer understand your value-added service offering and use that as a basis for pricing the proposal. As a result, understanding and learning about the importance of procurement in both private and public sector is vital for business owners.

Entrepreneurs commonly feel that the only way to gain new business is by establishing a relationship with the sales department, whilst that might be true for certain industries corporate governance, compliance and regulation, business continuity, and the competitive bidding process are all important considerations when choosing to send that email introducing yourself and what your company offers. The focus is not only on what you can offer but ticking all necessary compliance requirements, indicating, value proposition beyond offering the lowest “price”, It’s all connected, believe it or not!

 How then do you set yourself up for success?

There are many articles, policy document by government entities, industry bodies like the Department of Trade and Industry (DTI) who offer a with a wealth of knowledge; I encourage you to read them – immerse yourself in them and apply what works for you, secondly identifying what is aligned to your business objectives. As a practicing procurement professional, I would highlight and strongly encourage the following two crucial points to entrepreneurs to know:

 1.     Competitive bidding wars

When a business need develops, the procurement team searches the internal database for suppliers who match the basic standard requirements, then asks business owners to submit offers, which are then compared to those of other prospective bidders. In essence, business owners should be aware that there is a procedure to follow before becoming qualified to deliver a product or service. This aids the procurement team in conducting a fair process and maintaining corporate governance. As a result, they will have a lower chance of being chosen as the winning bid if they do not have sufficient requirements that meets specifications, drives compliance and risk mitigation plans.

2.    Preferred supplier status

To transact with the organization, every company must be registered on the database. However, being registered as a prospective supplier does not guarantee that you will be included in any RFx process. The database can also be used by the Procurement team to track supplier data, make payments, and manage supplier performance.

Over and above this, you as an entrepreneur need to be ready to prove yourself. Here is a checklist to run your eye over:

a)    Growth does not end after registering a company on CIPC, it takes more than that to grow, appreciate the need to be part of the bidding process and all the regulatory information required.

b)    Being an accredited BBEE company – are you representative of South Africa’s demographic? Organizations are looking for transformation with diverse people and minds who they can work with – are you that somebody?

c)    Know your finances – have you been previously liquidated or found guilty of conducting fraudulent activities or fronting?

d)    What are your brand values?

e)    How will you add value to your clients?

In essence, as a potential service provider you have a story to tell, and as an organisation (private or public) we have a duty to fulfill. It is possible that the relationship we develop will be beneficial to both of us. I challenge you do better so you can be the best. See your procurement team as a partner and not the crusher of dreams; we have all parties’ best interests at heart. However, we will run a process that is fair, equitable, transparent, competitive, and committed to contributing to our country’s economic success.