We’ve been desperately clamoring for 2021 and it’s finally arrived. A new year, a fresh start, filled with high expectations and goals. It would be difficult to find anyone who says they don’t want, and expect, 2021 to be better than last year. And every procurement leader I’ve talked to is focused on heightened performance, better results, and raising the bar for their teams.
The challenge, once the bubbles from New Year’s Eve are gone, is how to achieve this. For a lot of procurement teams there are so many areas on which to focus – savings, automation and digitization, emergence from the effects of the pandemic, embracing sustainability, diversity, and risk. The list can go on and on.
Regardless of the size of the company, the industry and business segment, or the maturity level of procurement, the challenge is similar. 2020 shifted priorities, and I’ve had some Chief Procurement Officers (CPOs) tell me it was a “lost” year in many regards. There is pent up demand and urgency at many companies. You must prioritize the goals, focus on what matters most for your business, and drive results against those. But that can be easier said than done.
Successful CPOs and procurement leaders are masters at managing change and in navigating challenges. The complexities of this new year are no different; I would suggest an apt motto for 2021 is “Focus Drives Performance”.
Here’s my thoughts on ways to achieve success in 2021, some key pillars to focus on, and to execute against.
Data & Analytics
Solutions start with understanding the problem, and for procurement that almost always means understanding the data – the details of spend, supplier performance, contract provisions, and a myriad of other metrics. From source to pay, we have data that can and should be analyzed, and there is a plethora of tools to assist in managing and analyzing that data. This gives visibility not only to those details, but to the bigger picture, and to the strategies that are derived from it. (And by the way, if you don’t have the systems and tools, now is the time to get them!)
We’ve all heard the adage “the devil is in the details”; well, I’d say instead, the solutions are often found in the details.
Supplier Collaboration
Now more than ever, it’s critical to have a proactive approach and a formal program for supplier collaboration. This should encompass sustainability, supplier diversity, and innovation partnering. 2020 highlighted that suppliers and the supply chain as a whole are crucial for procurement and overall business success. Let’s face it, without viable suppliers that you can count on, not just today but in the future, procurement and the business won’t succeed.
Risk Management
For years, procurement leaders have talked about the need to embrace risk management, and to make it part of the fabric of the procurement function. But very few have actually accomplished this. The challenges of 2020 put a large spotlight on risk factors – supply chain resiliency, supplier financial viability, business continuity – just to name a few. In 2021, CPOs have to focus on risk management and perhaps more importantly, on risk mitigation. Many companies were caught off guard by the pandemic, by supply chain disruptions, lockdowns and work from home mandates, and abrupt changes in category focus (for example, the sudden need to source PPE, the shutdown of travel, and the shift to virtual technologies).
Procurement leaders must make risk a “natural” part of the source to pay process. From the sourcing and vetting of suppliers, to the managing of the supply chain, and to the ongoing lifecycle management of supplier performance, risk management is now a critical part of procurement’s processes and objectives.
But, as every procurement leader knows, they still have to focus on execution, on the operational excellence that results in savings, value creation, and stakeholder partnership. The role of procurement is more important now than ever. CPOs are being asked to deliver more - more savings and value, more innovation, more transformation. It’s a challenge, but one that successful procurement leaders will rise to.
My motto for 2021: Focus Drives Performance