Checking the procurement pulse
Science Warehouse has attended a series of events over the summer 2011 that have provided a pulse check on the procurement profession, across both the public and private sectors. The Conference on University Purchasing (COUP), Advanced Business Solutions’ Connect Conference and eWorld Purchasing & Supply were attended by procurement and finance professionals across a range of industries. Despite this variety, a number of common themes and challenges facing each of the sectors emerged, Jonathan Betts, Science Warehouse, reports.
Economic uncertainty, volatility in investment and commodity markets, supply chain disruption and ongoing globalization shifts are all impacting growth and competitiveness for firms. At the same time, austerity measures mean public sector organizations are being challenged to deliver improved services with fewer resources and uncertain funding streams.
With all this uncertainty about, procurement has a fundamental and increasingly important role to play in delivering value and reducing risk. Procurement is increasingly in the spotlight and is being required to deliver not just one-off gains but sustained value year on year.
Historically, procurement has been viewed as all about cutting costs. Worse still, procurement itself has often been seen as a cost to be cut in times of crisis. In fact, procurement skills and resources are an innovative contributor to growth with better sourcing driving better products for the likes of Honda.
For markets where revenue growth is limited, innovative supply chain initiatives offer opportunities for differentiation and value generation. For many organizations, there are still significant opportunities to cut costs without harming the business through the simple stuff such as transactional efficiencies and spend control.
Interestingly, whilst many businesses have been through the cycle of analyzing their spend, putting a category management structure in place and then implemented spend management tools to control it, there are many organizations who have barely touched on indirect spend. No one can argue against a focus on directs, but with a third of all spend on average on indirect products and services (and carrying a disproportionate spend management overhead in many cases), it represents a significant source of untapped value.
SEE OTHER TOP PROCUREMENT STORIES IN THE SUPPLY CHAIN DIGITAL CONTENT NETWORK
There is a definite sense now that procurement technology is becoming mainstream. Customers are aware of the key attributes to look for in a solution – going beyond a shopping list of functional requirements for evidence of what has actually been delivered. They can look to earlier adopters for this evidence (usability, connectivity, speed of implementation, etc.) and on the back of this accelerate returns from their own implementations.
Organizations will have different imperatives depending on where they are in the spend management journey. One thing that the experienced practitioners agree on is the need for high quality data as central to their P2P implementation.
The latter organizations have recognized the need for good data to overcome the ‘P2P value gap – the difference between projected and actual value generated in a P2P project. In spend management, as in all other areas of business, knowledge is power. Knowledge is built up from information which in turn is dependent on data.
Edited by Kevin Scarpati
Tradeshift: Pioneering eProcurement and Digital Trade
Tradeshift helps transportation and logistics organisations digitally transform their processes. The company offers a suite of services, including spend management, accounts payable and invoice automation, eprocurement, and supplier collaboration through a dedicated B2B supply chain marketplace of more than one million businesses.
As disruption and digitisation continue to accelerate, demand for Tradeshift’s solutions has grown dramatically. The company recently announced the signing of 20 new global enterprise customers since the beginning of its financial year on 1 February, while the number of active businesses transacting on the Tradeshift platform rise by 52 per cent year on year.
Tradeshift Chief Revenue Officer Christope Bodin expects that growth trajectory to continue, as the economy begins to fully reopen and the world works towards recovering from the pandemic. “We are well positioned to support the wholesale digitalisation of business processes,” Bodin said. “For organisations looking to grow in a post-COVID economy, this is fast becoming an organisational standard.”
Tradeshift in Brief
- HQ: San Francisco, USA
- Employees: 800 located in offices in 13 countries
- Customers: 500+ in 190+ countries
- Total on-platform transaction value: $1tn
- Platform: 1.5m companies connected
Key Tradeshift customers: Volvo, Kuehne+Nagel, DHL, Air France-KLM Group
Tradeshift: From $1 to $1 trillion
The company was established with a mission to “connect every company in the world, digitally,” according to Lanng, and followed the trio's earlier product EasyTrade, a pioneering open-source trade platform.
In July 2021, just over a decade since launch, Tradeshift announced passing a new milestone: the cumulative value of transactions processed across its platform passed the $1 trillion threshold. To put that in perspective, Tradeshift said it took two years to reach the $1bn milestone.
Commenting on Tradeshift’s current and future standing, chief executive Christian Lanng said: “We’ve helped a lot of businesses to stay operational and get paid during an extremely volatile period. Every time a business joins our platform it unlocks a whole ecosystem of relationships that we can help to digitise. This sets us apart from the majority of enterprise software providers who remain preoccupied with building connections one at a time.”