How Procurement Leaders Can Drive Business Value with SAP

Procurement, once viewed as a cost center, has evolved into a strategic function capable of driving significant business value. With the right tools and strategies, procurement leaders can transform their organizations, and SAP offers a comprehensive suite of solutions designed to empower procurement teams to achieve these goals. In this piece, we outline what Chief Procurement Officers (CPOs) and other procurement leaders should be thinking about and suggest solutions to help you drive business value with SAP. 

5 WAYS TO DRIVE BUSINESS VALUE WITH SAP 

Collaborate Enterprise-Wide 

Closer collaboration between finance and procurement teams is now critical, and CPOs are better positioned to be a full-fledged strategic partner to the rest of the C-suite. When you’re in sync, your goals align and your key performance indicators (KPIs) head in the right direction. This means stronger risk mitigation, better cost containment, and effective spend management. But how do you find your synergies? Consider asking yourself these key questions: 

1. Does procurement’s reporting 1 structure align with business priorities? 

Procurement’s remit is expanding. As such, teams need to continue to drive business outcomes aligned to corporate strategy.  

2. Does procurement have the tools to drive better spend management? 

Digital spend analysis tools enable procurement to optimize visibility into spend patterns, benchmark outcomes, and improve performance.  

3. How effective is your organization’s approach to category management? 

Strategically segmenting spend and resources can give you valuable intelligence and better understanding of true supply chain cost dynamics, helping your business cut costs and increase profitability.  

4. How is procurement helping you optimize cash flow and working capital? 

Faster invoice processing and capture of early payment discounts can significantly optimize your cash flow and working capital. There’s also a big opportunity for finance and procurement to partner more closely on working capital management to improve business performance.  

5. How does procurement manage supplier relationships and risks? 

CFOs and other executives are looking to procurement to help them better understand supplier relationships, risks, and opportunities. 

Blend The Right Internal/External Talent Mix 

The confluence of factors such as the rise of gig economies and rapid technological advancements has created a complex talent landscape, and CPOs and procurement leaders are at the forefront of navigating this terrain.  

Acute skills shortages and a challenging economic environment make it more important than ever to execute an effective workforce plan – and that means having real-time visibility into all the skills needed and the tools to find the right people at the right time. This visibility, coupled with advanced analytics, can empower organizations to create a strategic talent acquisition plan, identify emerging talent needs, optimize workforce allocation, and mitigate risks associated with skills shortages. 

To maintain operational agility, organizations must have a robust system for managing this contingent workforce. SAP Fieldglass, for instance, provides a comprehensive platform for sourcing and managing external workers by centralizing these processes. Additionally, SAP Fieldglass offers advanced analytics capabilities that enable procurement leaders to optimize workforce spend, identify cost-saving opportunities, ensure supplier performance, and more.  

Implement AI and Analytics 

Streamlined digital processes have delivered many benefits. Procurement teams can now take these gains to the next level with spend analytics tools and innovative AI solutions. Both need high-quality data to deliver the intended value, yet this is an area that requires improvement. In fact, less than ¼ of CPOs feel confident about their data. 

To truly unlock the potential of spend analytics and AI, procurement leaders must prioritize data governance and quality. This includes ensuring data accuracy, completeness, consistency, and timeliness. Procurement teams also need to go beyond simple reporting and analysis. They should focus on using data-driven insights to identify actionable opportunities for cost reduction, profitability, risk mitigation, and supplier optimization.  

Digitalize Category Management  

As global supply markets have become increasingly complex and volatile, category management has emerged as a key strategy to address supply chain challenges – from geopolitical tensions to increasing transportation costs. With category management, procurement leads can: 

• Identify cost-saving opportunities through rigorous analysis of spending patterns and supplier performance. 

• Assess supplier capabilities and vulnerabilities to build a resilient supply chain. 

• Collaborate with suppliers to develop new products and services that meet evolving customer needs. 

• Integrate sustainability criteria into the sourcing process and measure supplier performance accordingly. 

SAP Ariba, for example, provides organizations with a platform to support these objectives. Specifically, its Category Management feature can help organizations optimize their supply base and improve spend management performance with increased visibility and collaboration. 

Embed Risk-Aware Procurement to Manage Volatility 

While having access to risk data is essential, deploying “risk-aware procurement” means going much further and embedding risk intelligence throughout the source-to-pay process. This involves a holistic approach that considers risk at every stage, from supplier selection and onboarding to contract management and payment. 

Creating a robust internal risk scoring methodology is paramount to quantifying and prioritizing risks. After all, 30% of executives say supply chain visibility is procurement’s top organizational risk priority for the next 12-18 months. This methodology includes establishing clear criteria and weighing factors to assess various risk dimensions, such as financial stability, operational performance, regulatory compliance, and environmental impact. Once a risk scoring model is in place, organizations can leverage solutions like SAP Ariba to evaluate supplier performance and calculate their overall risk exposure.  

By correlating supplier data with the internal risk scoring model, procurement teams can gain valuable insights into the potential impact of supplier-related risks on the business. This data-driven approach empowers organizations to make informed decisions about supplier relationships and mitigation strategies. 

NEXT STEPS 

Procurement leaders must be strategic partners who deliver tangible value to the organization, and by harnessing the power of SAP, procurement teams can streamline drive true business value. By focusing on the five strategies outlined above, procurement can become a true catalyst for business success. 

To learn more about getting started with SAP for your procurement needs, contact Crescense today. 

This insight was provided by SAP for value-added resellers like Crescense. Contact our team to learn more about SAP’s various Procurement solutions.