Navigating the Procurement Landscape in Asia's Evolving Tech Ecosystem
Effective procurement in today's tech-driven world demands more than just technological adoption; it requires a strategic approach that leverages innovation to create tangible business value. This article synthesizes key insights from a panel discussion at ProcureCon Asia 2024, where industry leaders explored the challenges and opportunities shaping the procurement function in Asia's dynamic tech landscape.
Panellists Jim Green, GM, Strategic Procurement at John Holland, Deepak Dwivedi, Head of APJ Market Procurement SEA & S Korea APAC at Nokia, and Tracey Yeh, VP Procurement at Pico Quantitative Trading shared their expertise on navigating complex supply chains, managing costs, harnessing technology, and developing strategic procurement teams.
Procurement Challenges and Optimization
How have you balanced continuous improvement of your team and technology with cost pressures, especially if your company has been under budget pressures?
Jim: Any improvement activity should result in savings hard, soft or just making life easier for staff, in all cases it should be possible to write a business case, if the case is marginal then it should probably be reconsidered.
Tracey: If the company has been under budget pressures, take a holistic and strategic view of where you're spending and assess how well that matches the operational needs and strategic goals. This process of budget re-examination may reveal planned initiatives that could yield significant efficiency and productivity improvements for the team. All projects are evaluated with the active initiatives and prioritized based on objective cost and benefit measures. By making smart choices when budgets are under pressure, leaders can set up their organizations to win in the challenging time.
Deepak: Besides focus on high impact initiatives that drive significant value, we may explore partnership with other companies, startups, and industry experts by leveraging their innovation and reduce costs.
How can procurement face challenges of global supply chain risk and price inflation?
Jim: This is a BAU issue, look at predictive and indices, and any likely global disruptors (US election….) We should plan on how to deal with a Black Swan event instead of trying to predict them.
Tracey: 1) To tackle the challenges of global supply chain risk: I believe data forecasting to help to predict the demand is the key, this is so we can hold inventory and manufacture accordingly. Also, we cannot rely on a few product sources. As supply chain issues can cause disruption anytime, we need to have alternative sources to ensure a consistent flow of products to meet the market demand. 2) As for price inflation which is a complicated matter, procurement must turn sourcing strategy to where we can find the materials, we need at a price we can afford. As the increased costs often get passed on to the final customer, and will reduce demand, and hurt revenue at the end.
Deepak: Combined approach that includes developing a robust supplier risk management program to identify, assess and mitigate risks, using data analytics and monitoring to enhance supply chain visibility and diversification of suppliers to minimize cost increases. Business users generally want quick procurement turnaround.
What is the main tip that you would offer to balance speed to procure vs compliance & control?
Jim: Develop a robust procurement schedule so there is a base line to work from, have robust systems and inbuilt controls, having a good set of benchmarks helps when dealing with customers with unrealistic expectations.
Tracey: a) Establish a clear policy, processes and procedures, b) Qualify and pre-approve suppliers, c) Build collaboration with user departments and stakeholders, d) Standardise documentation, and make it simple, e) Provide regular training, f) Establish KPIs to measure speed and accuracy. Deepak: Early involvement of procurement in the sales process (e.g. customer opportunity development / solution creation phase) can significantly reduce cycle times. Additionally, automating and streamlining approval processes for routine commodities can accelerate procurement.
There are innovations that shift activity from procurement to the business. How has this been navigated successfully and what role did procurement play?
Deepak: Depending on specific sourcing needs or sector, procurement can play a vital role as an innovation catalyst, process optimizer and strategic advisor to the business. E.g. in specific area procurement provided customer insights to the business, enabling targeted upsell opportunities.
Leveraging Technology for Procurement
There is a huge difference between AI and GEN AI. How would you look at GEN AI as a tool to drive procurement?
Jim: Look at what the developments in the software platforms and see what suits your business
Tracey: Gen AI can handle huge data sets; it simplifies how procurement experts understand information and make smart choices by using data analysis and machine learning. Gen AI can also suggest actions to save time and money by improving the workflows and find ways to cut costs. Use of Gen AI in procurement allows Procurement to solve complex problems more efficiently. AI can be embedded into several software applications from spend analysis to contract management and to strategic sourcing.
Deepak: There are few solutions around supplier negotiation support e.g. real-time support during negotiations, suggesting counter offers, and identifying areas for compromise, automated and collaborative negotiations
To drive increased automation, what are the difficult to solve for challenges? What technology are you deploying to solve these more complex challenges?
Deepak: Achieving seamless collaboration with ecosystem partners is a key hurdle in automation. We're addressing this by implementing automation orchestration tools to streamline processes and data analytics platforms to gain valuable insights for performance improvement.
How to ensure good and smooth transition when we want to implement new technology in our procurement / supply chain team?
Tracey: This includes developing a clear technology roadmap, investing in employee training, updating policies and procedures, and executing a robust change management plan. Many of the benefits from digitalization may not be fully quantified in dollars and cents. Any recommendations on how you have influenced c-suite buy in?
Jim: This is a relationship question, know what their drivers and visions are and play to them Tracey: To get C-suite buy in on digitalization, we need to talk in language that C-suite understands – and understand them too, we create a customer lifecycle map that includes everyone, we demonstrate how digitalisation supports the business and the bottom line, and demonstrate we understand how to manage change.
Strategic Procurement and Team Development
How can we deploy sustainable procurement in strategic sourcing?
Deepak: Provided sustainable procurement policies are well defined, sustainability criteria need to be incorporated into RFPs, supplier enrolment, registration and selection process. Conduct life cycle assessments and consider environmental and social cost in addition to financial cost as part of TCO evaluation.
How can we further develop procurement teams to move from being doing mainly operational/administrative activities to being more strategic?
Tracey:
- Investing in technology tools to be more efficient
- Mitigate economic and geopolitical risks
- Set and achieve ESG goals and prioritise sourcing from responsible suppliers
- Integrating more closely with other parts of the organization
Deepak:
- Redefine roles to focus on strategic activities
- Foster a strategic mindset and encourage innovative thinking
- Provide training and development opportunities to enhance skillsets
- Communicate value propositions and address operational issues strategically
Stakeholder Management and Procurement Success
In the Indirect space, how do you drive your strategic procurement team's success with the stakeholders, and what do you define as success?
Tracey: Stakeholder management is the process to organize, monitor and improve the relationships with our stakeholders. It involves systematically identifying stakeholders; analysing their needs and expectations; and planning and implementing various tasks to engage with them. To track and measure our progress and outcomes, we need to create metrics that are relevant to our objectives and stakeholder groups. Metrics such as engagement frequency, satisfaction, advocacy, and influence can reflect the performance of our stakeholder management strategy.
Our Contributors:
Jim Green, GM, Strategic Procurement, John Holland
Deepak Dwivedi, Head of APJ Market Procurement SEA & S Korea APAC, Nokia
Tracey Yeh, VP Procurement, Pico Quantitative Trading