6 Procurement Best Practices to Prepare for the Future

Professionals in every industry need to maintain up-to-date knowledge of emerging trends. Procurement, however, is in a rapid state of change. It's transforming from a back-office administrative function to one with significantly more influence over companywide decisions. Following procurement best practices has never been more critical to business success.

Below, we elaborate on six critically important best practices that will empower you to remain competitive in the future.

TOP 6 PROCUREMENT BEST PRACTICES FOR 2022

Below, we unpack each best practice and provide explanations of why they’re so important and timely. However, first, we’ll give you a sneak peek at our list:

1. Implement a fully digital procurement process
2. Shift to sustainable procurement practices
3. Make transparency a priority
4. Embrace mobile app technology
5. Form strategic alliances with preferred suppliers
6. Improve supply chain communication

Now, let’s dig in.

1.   IMPLEMENT A FULLY DIGITAL PROCUREMENT PROCESS

Emerging technology and cloud-based automation software lie at the center of today's most successful industry-leading businesses. Automating manual, paper-based processes significantly increase efficiency and streamlines data collection and analysis while cutting costs.

The use of cloud-based software-as-a-service (SaaS) in procurement is rising rapidly. Procurement software represented the fifth largest global SaaS market as of 2019.

Paper-based procurement is a thing of the past. The insight gained from accurate data storage and automated analysis drives highly-informed decision-making. It is transforming procurement into one of the most influential business functions.

Digital, SaaS technology drives global commerce today. Consequently, businesses that don't abandon paper-based, manual processes may quickly fade into the competitive background.

It's simply unfeasible to expect a business to remain competitive without the advantages delivered by automation software.

2.   SHIFT TO SUSTAINABLE PROCUREMENT PRACTICES

New generations of consumers prefer doing business with companies with strong corporate social responsibility (CSR) reputations. It's no surprise that 85% of consumers are more likely to buy from companies known to embrace sustainable business practices.

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Sustainable procurement is the way of the future. How does this relate to procurement and supply chain management? Data from McKinsey & Company indicate that 90% of a company's negative environmental impact stems from supply chain practices.

Successful procurement organizations of tomorrow will start to adopt sustainability policies and embrace sustainable procurement today.

3.   MAKE TRANSPARENCY A PRIORITY

Today’s consumers prefer to buy from brands that champion sustainability. Providing transparency around your sustainability efforts is necessary if you want to reap the associated benefits of sustainable supply chain efforts.

Sustainable supply chain practices undoubtedly represent a positive development in the evolution of procurement. Unfortunately, helping to save the environment doesn't generate revenue on its own.

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Transparency in business is quickly becoming the norm. Therefore, when you adopt sustainable supply chain processes, it's essential to communicate your efforts to the market whenever possible. AS a result, your business will remain competitive, continue to grow, and make an even greater impact with its sustainability efforts.

In short, transparent sustainability supply chain management will be a significant market differentiator over the next decade and beyond. We already see it in some industries, manufacturing being among the most visible.

4.   EMBRACE MOBILE APP TECHNOLOGY

SaaS companies in general—including procurement software providers—are increasingly offering mobile app versions of their systems. Mobile procurement apps let users access key data from anywhere they have mobile data.

Users can work with purchase orders, remotely track the delivery status of ordered supplies, run spend analysis reports, etc., while on the move. In today's fast-paced world, using mobile apps while on the job is par for the course.

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Mobile procurement apps are paving the way forward. Mobile procurement management apps improve collaboration, efficiency, and internal communication. They also provide easier access to crucial business insights.
Consider that implementing mobile apps drives 40% of B2B revenue. That number is sure to keep rising.

Digital procurement is the way of the future. Therefore, mobile apps will—and already are—playing a significant role in driving digital transformations in the procurement space.

5.   FORM STRATEGIC ALLIANCES WITH PREFERRED SUPPLIERS

Supplier relationship management is essential to a procurement organization's ability to add value and reduce spending. Nevertheless, having solid relationships with suppliers isn't enough these days.

The most successful procurement teams in the future will form strategic partnerships with suppliers. Doing so provides an abundance of benefits.

Therefore, if you gain your suppliers' trust, they can act as your eyes and ears, providing you with information about innovations in your space.

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Strategic alliances can greatly enhance your procurement efforts[/caption]Additionally, when you form a mutually beneficial strategic partnership with a supplier, they will likely come to you with new ideas.

You'll have the inside track on new developments in your space. Plus, you'll also have first access to new offerings and insider knowledge your competitors do not.

Procurement teams that form strategic alliances with suppliers can take immediate advantage of innovations. As a result, they will carry a distinct competitive edge in their respective procurement industries.

6.   IMPROVE SUPPLY CHAIN COMMUNICATION

A lack of effective internal communication plagues many areas of business. Unfortunately, poor internal communication around procurement and supply chain processes can deliver painful blows to a business's bottom line.

For example, if a procurement manager negotiates a significant price reduction with a supplier, the company can realize substantial cost savings.

But what happens if there's no digital data storage mechanism in place to provide visibility into that negotiation?

Let's say that the next time those same supplies are needed, another procurement manager processes the order. They may be unaware of the negotiation and end up paying the full price. They’ll miss out on the cost savings their colleague worked to establish.

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Effective communication is key to results-driven procurement management[/caption]Everyone involved in the procurement process needs insight into every touchpoint and action taken by their team members.

This is easy to accomplish with procurement software that delivers advanced order management capabilities. All users can maintain visibility into contracts, invoices, accounts payable data, and more.

FINAL THOUGHTS

As procurement changes, teams must anticipate industry changes and prepare to benefit from them. At the center of these changes is the expedited shift to digital procurement, driven by the proliferation of e-procurement software.

Procurement organizations that adopt digital processes will benefit from the insights and a data-driven procurement strategy, facilitated by automation software.

Organizations that haven't undergone a digital procurement transformation should start today if they want to be competitive in tomorrow's marketplace.

The coming decade will see procurement transform in many unexpected ways. Consequently, the most effective strategy for adapting to this transformation is to anticipate emerging procurement management trends before they arrive.

Follow the best practices above, and you'll be well-positioned to ride the wave of change that's defining the future of procurement as we know it.

The easiest way to adhere to these best practices, as mentioned above, is through the use of procurement software solutions. If you’re still using a paper-based process and would like to learn more about the extensive benefits digital procurement offers, schedule a free demo of Tradogram’s procurement management system today. You have everything to gain and nothing to lose.