In today’s challenging business landscape, procurement is crucial for ensuring supply security, managing costs and risks, and maintaining supplier relationships. Procurement professionals must balance value delivery within tight budgets and limited investments.
According to PwC’s February 2024 Digital Procurement Survey, which included 1,000 companies across 60 countries, procurement departments are prioritising:
- Cost Control
- Digital Transformation
- Strategic Sourcing
- Cost Control
Nearly two-thirds (65%) of procurement executives cite cost control as their primary focus. Despite inflation and interest rates decreasing in 2024, the impact on margins persists, necessitating proactive strategies for cost savings and efficient working capital management.
- Digital Transformation
Digital transformation is a key focus for 46% of survey participants. While most procurement teams have already implemented foundational digital solutions such as Source-to-Contract (S2C) and Procure-to-Pay (P2P) systems, there is a clear ambition to extend digital capabilities beyond the traditional Source-to-Pay domain. Data and automation through AI is top of mind.
- Strategic Sourcing
Strategic sourcing remains a top priority for 36% of respondents, vital for cost efficiency and value creation. Enhanced sourcing capabilities enable procurement departments to improve performance and manage risks effectively. Especially when looking at intelligent sourcing automation for unmanaged spend areas that go beyond traditional RFX/auctions.
Integrated Approach for CPOs
Looking at the top three priorities, it seems not much has changed during the past years. However, the challenge lies in the fact that CPOs need to address and execute on their priorities simultaneously and synergistically. This can take place by leveraging procurement technology that integrates data insights, strategic planning, and execution tools.
An example of this approach is outlined below:
1. Start with Insights
- With Data Analytics listed as the biggest area of investment for Procurement, the ability to aggregate and analyse spend data across categories, suppliers, and geographies allowing the business to identify opportunities for cost savings, sustainability, supply base optimisation, and risk mitigation is a strategic imperative.
2. Plan Strategic Actions
- Based on insights from intelligent analytics, the CPO, in collaboration with category managers, develops category strategies. Plans may involve consolidating suppliers, negotiating volume-based discounts, and selecting suppliers aligned with sustainability standards.
- AI-assisted category segmentation, cost analysis, and supply market intelligence enhance and accelerate planning.
3. Execute with Precision
- Organisations use e-sourcing tools to conduct competitive sourcing events across multiple sourcing channels to action the strategy.
- Interconnected process ensures the strategy is updated with negotiated savings.
SAP’s Triple Crown
SAP’s Triple Crown combines spend analytics insights with planning in category management and enables strategic sourcing execution across multiple channels. This integrated approach helps CPOs address their priorities effectively by leveraging best-of-suite and best-of-breed technologies infused with AI automation, to help procurement teams achieve greater efficiency, compliance, and strategic value.
To dive deeper into how SAP’s Triple Crown can tackle challenges around visibility and insights, stay tuned for upcoming posts detailing this innovative approach.
