Perception of the procurement function has evolved from a ‘support role’ to a fundamental lifeline for manufacturers. Procurement professionals in manufacturing must juggle demands from management, R&D, operations, finance, suppliers, and end customers.
Trying to maintain this balancing act while also solving problems manually leads to overspending, suboptimal supplier footprint, poor negotiation strategies, supply risk, and personnel burnout. As a result, manufacturing procurement leaders are increasingly getting involved in the more strategic decision-making and approval processes related to spend management.
Proactive, automated, and integrated spend management solutions help them do it, cutting down on the busywork to pay more attention to the strategic decisions. These solutions will be increasingly vital to thriving in a volatile economy, no matter the company’s product, industry, or service. The right cloud-based technology stack used across finance and procurement teams provides the power and flexibility to control every dollar, every expense.
2023 will be the year that smart organizations take off their firefighting gear and begin building the bulwarks that will protect them from future turbulence. Manufacturers just need to implement three critical solutions help unlock value and ensure success in 2023 and beyond:
1. Automate & integrate to improve organizational agility and accuracy
Manufacturers need a spend management solution that is connected in real-time to their production plan, financial outlook, and payment processing tools to make agile and informed decisions, as their business circumstances frequently change. Unfortunately, supply chain, finance and procurement data is often siloed. Frequently, these teams must manually connect financial plans to evolving supplier spending data while keeping pace with constantly changing market conditions. This is time-consuming and does not provide real time data.
Additionally, manual processes in spend management and sourcing allow for errors, which lead to overspending or insufficient resources. This can mean life or death for a manufacturer, whose margins often leave no room for error. Automation of basic data input reduces the opportunities for human error and ensures data accuracy.
The right planning solution can automate the collection and aggregation of data from multiple sources in one place for easy reporting and analysis. Organizations need this data to efficiently model different scenarios and determine which strategic decisions provide the most value. Additionally, integrations between both planning and spend management solutions can help ensure spending correlates to approved budgets and forecasts align with project spend.
2. Drive real-time business insights with data visibility and analytics
Many things affect the overall supply chain: availability of components, shipping times, ESG initiatives, and of course, cost. Many of these variables (and their associated cost) are also affected by a company’s strategic plans and financial outlook. This makes collaboration and synchronization between an organization’s procurement, finance, and supply chain functions crucial. A wrong decision can cost companies thousands of dollars, just as the right decision can contribute immense value to the bottom line.
Advanced sourcing tools help visualize and optimize all variables, including risk, ESG, contract terms, and performance — not to mention cost, cost, cost. Real time connections between technology solutions transform data into a powerful decision-driver. Real time analysis of plan versus actuals enables procurement and finance teams to identify cost savings opportunities, make agile financial decisions, and optimize efficiencies across the supply base.
Data transparency empowers business leaders to establish effective processes and policies, negotiate value-creating agreements, and implement business practices that allow for variability in their business conditions. Without the right cloud data and connected planning solutions, these improvements go unrealized.
3. Build a sustainable and strategic supply chain
Digital procurement processes, data visualization, and business networks have ushered in a new age of transparency, cross-functional collaboration, and strategic decision-making. With the right technology solutions, procurement professionals have access to a comprehensive view of total spend across their organization, and detailed visibility into their supplier footprint.
This comprehensive view, made quickly and easily accessible by modern sourcing, connected planning and cloud data solutions, helps procurement tackle complex challenges like achieving sustainability compliance, strategic sourcing, and building long-term resilience for their business.
Without strategic supplier partners, reliable product supply and revenue is in jeopardy. Without competitive costs, the financial margins simply won’t survive. Without data transparency and visibility, business leaders are left unarmed and uninformed. Digital solutions for areas that touch procurement, whether it’s a data warehouse, planning system or sourcing solutions, not only reduce error and give leaders insight, but also free up their time to put that insight towards better, more effective strategies.
Manage spend and unlock the power of digital transformation with a trusted partner
Procurement cannot operate successfully in a silo. The function’s success is heavily reliant on its internal business partners, and managing spend is the responsibility of every member of an organization, not only procurement. Technology solutions that synchronize internal operations and maximize value-driving decisions don’t just help manage spend but unlock long term resilience against the inevitable uncertainty ahead.
If digital solutions to ensure enterprise-wide data visibility, optimize supplier management and sourcing costs, or automate time-consuming manual processes sound like something your procurement function could use yesterday, contact Hannah Cook at [email protected].