How to Unlock Opportunity With a Procurement Control Tower
With market volatility and sky-high inflation driving shifts in the price of oil and other commodities, it’s not surprising to see businesses adjust sourcing and inventory strategies in anticipation of future roadblocks. Plus, with consumer demand softening, many companies that largely over-indexed on orders last year are now sitting on a surplus of supply.
This wave of change, mixed with continued disruption across global supply chains, has put a new level of pressure on procurement leaders, who are on the hook to reduce sourcing complexity and uncover opportunities that deliver cost savings and efficiencies.
To do just that, however, procurement must be able to identify and address points of failure up and down the supply chain in advance of disruption. Siloed vendor systems make this task nearly impossible. But a procurement control tower can help leaders gain a well-rounded view of their suppliers.
A procurement control tower is a centralized data hub for sourcing and procurement-related data. Instead of sorting through individual spreadsheets or data dumps from disparate tools and sources, leaders can leverage a real-time view of suppliers, factories, partners, and carriers to assess risk, identify savings and optimize procurement performance.
When market uncertainty is high, business priorities shift to minimizing risk and maximizing liquidity. For procurement, a heightened focus on cash flow often means delivering more for less.
Getting it Right
But getting procurement right can be tricky. It requires diligence across preparation, solicitation, payment processing, record-keeping, and end-to-end visibility and communication.
For instance, a sourcing project might include hundreds of stakeholders in several locations, which raises the margin for error. Imagine those stakeholders are responsible for inputting their data into spreadsheets that get passed from vendor to supplier to carrier for updates. Variables such as an unexpected storm or an overnight fuel price hike almost guarantee a high number of human errors, outdated information, and limited visibility.
Instead, a procurement control tower establishes a single source of truth for projects where stakeholders interact and view essential project data in real time.
Procurement control towers also help to establish metrics that are concrete, trackable, and visible to all involved parties. Beyond supplier performance purchase price variance and spend, consider the following key performance indicators:
- Field failure rates show how often the supply chain fails to meet a new product’s introduction schedule and how frequently products are delayed.
- Perfect orders are critical for master schedulers who need to know how long it takes to schedule and close purchase orders to effectively manage backlogs, supply, and allocation.
- Cost per and time to purchase order allows team leaders to see how much time it takes to get a PO and the cost to originate that PO.
With supply chain risk driving disruption hiding around every corner, increased transparency, real-time visibility, and data you can trust are critical. Establishing a control tower for procurement and sourcing data can provide the insights you need to spot points of failure, uncover efficiencies, and deliver cost savings to your business.