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2020: The End of Procurement

Published April 10, 2020

Written by: Amanda Prochaska
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Amanda Prochaska

Amanda has built a career over the last 15 years focused on implementing innovative solutions to procurement organizations and has a passion for coaching organizations through large-scale transformations. In her recent role at MGM, she was responsible for implementing and sustaining new, best-in-class sourcing programs and for leading the source-through-pay transformation. Before joining MGM, Amanda served as Associate Director at the Kraft-Heinz Company, where she led the simplification of processes, focusing on cost reduction strategies, supplier development, and technology enhancements. Prior to that, Amanda held various procurement roles within the CPG industry. She also is the author of “Procurement Unstuck,” a blog related to procurement and source-through-pay issues. She serves on the ISM Conference Leadership Board and is the Founding Chairman of the ISM Thought Leadership Council.   
 
She is now the President of High Performance Procurement (HPP).  HPP is the leading provider of Supplier Development Programs helping CPOs increase the reliability, sustainability, and scalability of the small and medium-sized businesses within their supply chains. By working directly with suppliers, HPP helps install systems and processes that give these important businesses the tools to grow and adapt as the needs of their large corporate partners change. Whether the supplier has 25, 50 or 500 employees, HPP establishes business practices that ensure growing operational and financial success with limited investment on the part of the CPO.
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A new year and a new decade brings about the end and the beginning of many things. Hopefully the new decade brings an end to the angry woman and cat meme as well as the retirement of the man bun (sorry, it’s not my style). All kidding aside, the new decade brings hope, a chance to renew, a time to reflect and an opportunity to leave the past in the past.    

It is hard to imagine what 2030 will look like and even harder to imagine the amount of change supply chains will see in the coming years. In the next 10 years, could we see 3-D printing change how items are produced?

Could we experience extreme automation of the entire source-to-pay process through IoT, RPA and AI?

Could we, through data aggregation, have no more vendor masters or item masters to maintain?

Could there be flying electric cars and drones changing transportation forever?

The possibilities are endless for what is to come and it will likely change how we operate, relate, and add value within our jobs and lives. 

It’s No Longer Just Procurement

A change that I predict we will see in the coming years is the end of the term “procurement” to describe the organizations and functions that we perform. This is because “procurement” does not accurately describe the scope of what we do and the value we provide within organizations. The expectation of our organizations and what many already do today expands well beyond the buying and negotiation of goods and services. It includes risk reduction, social impact, sustainability, community outreach, innovation, revenue generation, demand management, process optimization and so much more.  

Unfortunately when stakeholders and suppliers hear the word “procurement,” it harkens back to the days of old – piles of paperwork, POs, fist-pounding negotiations and price control. When the value we offer goes beyond the connotation of the word and our stakeholders are expecting so much more from us, it is time for a change. 

Maybe part of the problem with changing the name of what we do is there are seemingly no great alternatives to better describe it. Or maybe we are worried about using a commonly accepted name to describe ourselves. There are a couple of examples that could work and that are already being used effectively today. Below are some of the pros and cons of each.

Spend Management

Pros: Some organizations and source-to-pay technology providers are starting to promote and use spend management as a way to describe what they do. Spend management includes overlooked categories like travel expenses and partnerships with third parties and promotes asking questions about these spending categories. 

It is clear to stakeholders that if they are going to spend money on anything, the spend management team should be enlisted to add value to that process. It is clear, concise and allows for a broader scope to be achieved.

Cons: It’s too focused on spending money versus the bigger picture where there are opportunities to increase revenue, deliver process optimization, drive innovation or reduce risk.    

Enterprise Optimization

Pros: This term comes from the thought leadership of Ronald Wright and the crew at KAR Auctions around the value we provide. Breaking away from the spend-centric names, enterprise optimization expands to interactions with stakeholders and suppliers whenever there is something that could be more effective, efficient or cost less. These could be opportunities related to new innovations, anticipation and mitigation of business risk and sustainability. 

Cons: Depending on the organization, this definition and name might be too broad, overlapping with other departments’ responsibilities. It will be important to define the scope of what you have the ability to tackle within the world of enterprise optimization that works in the current landscape. 

At the end of the day, these two options might work well for some and not others. Finding a name that accurately depicts the value you deliver, what your stakeholders want and that works within your company’s culture is key. Think of the name of the function as a way to brand what you are trying to achieve, so be strategic and thoughtful. The name should help promote and inspire stakeholders to the new world of possibilities that can be achieved together. 

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