Why procurement needs a digital and decentralised approach in change management

Digitalisation within the procurement process is not without it challenges, with only 23% of manufacturers having incorporated a corporate-wide strategy digitalisation transformation. Yinyin, Head of Supply Chain and Procurement at ISS A/S, says that the biggest barrier for digitalisation in the implementation stage is always change management.

To increase its effectiveness, it’s also crucial to align your business strategy and roadmap. Does your business require a single source of truth that contains in one system, or does it not matter to the business? For example, a single system might be effective for P2P solutions, but inadequate in contract management. In this case, if contract management is the value-leaking piece, it will be more beneficial to change your focus to finding a system that has the best capability to support contract management.

The next generation of procurement operating model has combined digital technologies and operations capabilities, but digital initiatives may not be better in driving efficiency than having the right operating model within an organisation.

It may drive automation, but there are still many tasks that cannot be replaced by it such as sourcing strategies, supplier performance, and contract management. Yinyin believes that the right operation model, namely decentralised, centralised, and centre led, plays a big part in driving the procurement process, which in turn maximizes the efficiency.

Philipp Geissdoerfer, Vice President Purchasing & Supplier Management Automotive Technologies – Regional Asia Pacific at Schaeffler, explains that the company maintains a Global Category structure and approach while having a decentralized focus at the same time. Main categories being close the demand of division has created several benefits.

This has enabled them to maintain their volume aggregation advantages as a group in regard to their strategic vendors. Their approach to category strategy has remained similar, but decentralisation has helped increase their processing time while staying closer to their business needs.

Maintaining interpersonal relationships and having the supplier knowledge close to the departments, the alignment with stakeholders has even been more improved and faster decision making was only one of many positive effects.

           Yinyin Hao, ISS A/S           Philipp Geissdoerfer, Schaeffler