Collaborative procurement is one of those ideas that, on the surface, sounds so obvious it’s hardly worth talking about. Of course procurement is collaborative. Obviously, the relationships built up throughout your value chain can significantly impact your organisation’s performance. It goes without saying allowing the relationships and mechanisms of collaboration within your supply chain to degrade is bad. If left unattended, it can hurt your business outcomes, increase costs, and expose you to risk.
Collaborative procurement: not as easy as it sounds
However, just because something is obvious, doesn’t mean it doesn’t bear a second look. Just because something appears to be working, doesn’t mean that a new approach wouldn’t be beneficial.
The procurement sector is undergoing a profound transformation. Procurement teams are evolving away from the backroom, transactional function of years past. What’s emerging it something new—something streamlined, agile, strategically responsible, and digitally integrated. The role of the CPO is changing, too.
“The CPO is not only the chief procurement officer anymore, but the chief partnership officer as well—partnerships externally with suppliers and internally with other functions and business units—with procurement being a knowledge broker, creating value from the collaboration between inside and outside of the company,” the CPO of a large industrial company wrote in response to a recent survey by McKinsey & Company. Collaboration is not only in direct collaboration with an external network of suppliers, but it also serves as a porous membrane to facilitate collaboration between the business and its ecosystem.
Digital transformation is impacting procurement’s ability to analyse large data sets with machine learning and AI. These next-generation tools also help manage risk, predict trends, and automate repetitive, error-prone tasks. Perhaps more importantly, there is also room for technology to improve the ways procurement collaborates within and without the business.
The benefits of collaboratively approaching procurement
Collaborative procurement can reduce costs, improve quality, increase innovation, and enhance relationships between procurement and its suppliers and partners.
Mike Edmunds, Managing Director at Trade Interchange, argues that “accepting sub-par methods of communication and collaboration, and allowing these to negatively impact your process and consequently your company’s success, simply doesn’t make sense.”
Collaborative procurement can be digitally transformed with a variety of tools. These can range from cloud-based platforms that support real-time communication, as well as document and data management, to e-procurement systems like SAP Ariba, which automate and streamline procurement processes. Adoption of these management platforms and communications tools is nothing new. However, they are often underutilised in service of collaborative procurement.
Whether implementing simple tools or AI-powered automation, determining the goals of the collaborative digital transformation is essential. Edmunds writes that, “the impact of effective collaboration is extensive, rippling throughout a business in order to nurture a success-driven environment in which great achievements can be accomplished.” However, he adds that “It is as much a mindset, a determination, as it is a phenomenon to be assisted through external assets like technology and software.”
