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The insideEdge (SAPinsider Vol. 13, Iss. 1)

by Sanjay J. Poonen | SAPinsider

January 1, 2012

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.
 
       

Sanjay J. Poonen
President of Global Solutions
SAP

           

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?

A key component of success is sourcing excellence. The ability to meet or exceed savings targets is always of paramount importance to procurement groups. We hear from our customers that they must continually find ways to generate additional savings from sourced goods and services without sacrificing quality. A solid supplier negotiation strategy, strong collaboration with internal stakeholders, and streamlined processes help achieve this sourcing excellence goal.

Supplier management is also integral to an effective procurement strategy. As your organization sources more products and materials globally, you need better visibility into, and connectivity with, your supply base, as well as tools to help ensure that each supplier meets the performance goals that you have defined. To address these needs, you should have a 360-degree view of the data housed in your systems concerning supplier profile information, supplier performance, and supplier risk.

Leading procurement organizations leverage technology to drive change. Once you have decided to implement a software solution, the next step is choosing the licensing and deployment model that best fits your needs. Whether your top concern is cost, IT resources, or data storage, SAP has an option for you.

Now is the time to reach new levels of success in procurement, and we at SAP are excited to partner with you on this journey.

The feature stories in this issue of SAPinsider explore sourcing excellence, strategic supplier management, and licensing and deployment in more detail. They also touch on some of SAP’s inno­vative, best-in-class procurement solutions that you can leverage to drive transformation and growth within your organization. Now is the time to reach new levels of success in procurement, and we at SAP are excited to partner with you on this journey.

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