by Sanjay J. Poonen, SAP
With businesses shifting from a decentralized to a centralized model, the role that procurement must play within the business is changing. Companies now need to create one central procurement organization that can leverage tighter controls, enforce standardized processes and policies, and achieve new efficiencies and savings. In this article, Sanjay Poonen, President of Global Solutions at SAP, discusses key components of setting up a successful, consolidated procurement organization.
The role of procurement is entering a new era as businesses shift from a decentralized model to a centralized one, giving procurement more power than ever. Consider a large company with numerous business units that each have their own purchasing processes and supplier records. Such a decentralized structure may lead to unauthorized spending, process inefficiencies, and missed opportunities. By consolidating its procurement activities, a company can create one central procurement organization that can leverage tighter controls, enforce standardized processes and policies, and achieve new efficiencies and savings.
Given the global supply trends — like increased outsourcing and tiered supplier bases — that are driving changes in procurement practices, this shift toward centralization is occurring at precisely the right time. Most businesses are setting aggressive savings goals, and the boardroom is increasingly looking to procurement to help achieve them. At the same time, as more companies expand their global reach, their supply bases are expanding as well; this typically introduces new risks and heightens the need for stringent controls over supplier performance. In addition, these trends are occurring while companies strive to create the highest levels of operational efficiency and support an increasingly mobile workforce. Now more than ever, procurement must address these changes and provide secure access to systems anytime, anywhere. But how?