For years, procurement has fought to shed its back-office reputation, proving its value as a strategic business function. Many teams have made huge strides - driving innovation, managing risk, and delivering competitive advantage. Yet, unlike sales or finance, procurement’s seat at the table is still not guaranteed. Too often, it must justify its importance, battling outdated perceptions that it exists solely to cut costs and manage contracts.
The reality is clear: procurement leaders can’t afford to assume their strategic role will be recognised - they must seize it. In a world of supply chain volatility, inflation, and ever-rising expectations, the shift from reactive to proactive procurement isn’t just desirable, it’s essential. It’s time to take this transformation by the scruff of the neck - anticipating challenges, creating value, and ensuring procurement is not just involved in key decisions, but driving them.
Our industry experts Tom Mills, Mark McDaniel, and James Meads, shared insights on this topic in a recent DeepStream webinar, and below we’ve summarized the key takeaways from their discussion:
1. First, recognize the need for change:
A crucial first step in evolving from reactive to proactive procurement is recognizing its time to change. But what are the signs? Here are some of the common triggers we’ve identified:
- Business growth: Rapid expansion often requires a more strategic approach to procurement.
- Supply chain challenges: Addressing issues like resilience and sustainability necessitates a shift in focus.
- Financial performance: Proactive procurement can help mitigate profitability challenges through value-driven initiatives.
- Leadership changes: New leadership often brings fresh perspectives and opportunities to redefine procurement's role.
- Catalysts for change: Mergers, acquisitions, or external pressures (e.g. sustainability legislation) can serve as accelerants.
To instigate a change, leaders should conduct an introspective review to identify whether their current procurement practices align with the organization’s broader strategic goals.
2. Change how Procurement is perceived: From cost centre to value generator
Procurement must overcome the perception of being an administrative overhead by:
- Engaging the C-Suite: Gaining executive buy-in is foundational. Present a clear plan within 90 days to align procurement objectives with corporate goals.
- Articulating Value Metrics: Move beyond traditional cost-saving metrics to demonstrate procurement’s contribution to broader objectives like sustainability, risk mitigation, and profitability.
- Focusing on relationships: Build credibility and establish procurement as a trusted partner within the organization.
In order to change how procurement is seen, leaders need to adopt a marketing mindset, effectively communicating their vision and outcomes in ways that resonate with stakeholders.
3. Build the foundations for success
To transition successfully, focus on these four core pillars:
- People: Assess the capabilities and mindsets within your team. Soft skills like emotional intelligence, storytelling, and influence are critical alongside technical expertise.
- Technology: Invest in tools that enhance data visibility, automate mundane tasks, and streamline procurement processes. Leverage AI and analytics to move from reactive decision-making to proactive planning.
- Data: Develop clean, actionable data and use it for strategic insights. Imperfect data should not deter progress; focus on leveraging what is available effectively.
- Process: Simplify and prioritize initiatives, focusing on foundational improvements before introducing bells and whistles.
For your Procurement team to thrive, conduct a capability review and create a maturity model to map out your current state, future goals, and the roadmap to achieve them.
4. Prioritise Strategic Focus Areas
The journey to proactive procurement requires deliberate focus:
- Front-End Analytics: Enhance data capabilities to enable better decision-making and strategic sourcing.
- Digital Sourcing: Transition to standardised processes that deliver greater agility and transparency
- Supplier Relationship Management (SRM): Strong supplier partnerships reduce the need for frequent market engagements, maximizing long-term value.
- Post-Award Management: Establish clear ownership of contracts to prevent value leakage and improve supplier performance.
Focus resources on improving underdeveloped areas like analytics and SRM, while optimizing maintaining excellence in core sourcing processes.
4. The role of leadership
Leadership sets the tone for transformation. Procurement leaders must:
- Communicate a Vision: Articulate a clear, inspiring vision of proactive procurement and take stakeholders on the journey.
- Celebrate Success: Acknowledge and reward milestones to maintain momentum.
- Be a Lifelong Learner: Continuously improve and adapt to remain relevant and effective.
As a leader, prioritize fostering a culture of excellence, learning, and collaboration within your procurement team.
Conclusion
Making the transition from reactive to proactive procurement is not a simple process, but the benefits of enhanced resilience, better alignment with organisational goals, and greater value delivery are undeniable. By focusing on the right people, processes, and technology, and leveraging external support when necessary, procurement can cement its role as a strategic enabler for the business, even from a standing start.
Curious to see DeepStream in action?
Learn more about how our software digitally boosts your procurement proficiency, one step at a time. Request a demo here.
