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Unlock procurement’s trapped value

Elevating business results with integrated Kinetic Procurement

How companies procure goods and services today will define how the business runs tomorrow—how effectively it operates, innovates, and delivers to customers. Speed, flexibility, and innovation have become top priorities for procurement, but many leaders can struggle to transform their organizations. Three supply chain transformation leaders from Deloitte discuss the vision of built-to-evolve procurement—Kinetic Procurement.

Consumer-grade experiences

Procurement professionals are using legacy technologies at work, and cutting edge technologies at home in their personal lives. Consider that any consumer online shopping experience – which is procurement, really – takes mere clicks. Yet procurement in a business setting often involves hoops and legacy technology. For Ashish Panakanti, senior manager, Deloitte Consulting LLP, the mindset change that’s underway can’t happen quick enough. “Organizations are treating their employees as their first consumers. When they do that, the whole concept of enterprise operations is transformed allowing companies to better serve customers.”

Procurement tends to have what Harish Kumbhare, senior manager, Deloitte Consulting LLP, calls “trapped value”, and notes that it would behoove procurement leaders to set aside previous experiences and jaded thinking around maverick spending when it comes to transforming procurement. “With the technology, mindset, and processes, companies can provide a seamless experience for users that actually drives compliance.“

One kinetic procurement platform

Leaders with a vision for centralized procurement are facing the challenge of a disparate collective of legacy systems and processes that are at the heart of inefficiency for procurement teams. Subit Mathew, managing director, Deloitte Consulting LLP, submits that kinetic procurement activates that vision by leveraging SAP's central procurement application, which is a set of six core capabilities. Kinetic procurement gives companies the ability to centrally manage requisitions, centrally orchestrate procurement, central sourcing, central contracts and finally invoicing and analytics.

One platform where you can do everything also means data is in a single place, enabling companies to connect the dots across contracts, requisitions, transactions and so on. That, says Panakanti, allows the function to “intelligently examine the data and contribute to the spend management of the organization overall.”

Supplier collaboration

Suppliers have the potential to become procurement business partners, says Kumbhare. Companies that embrace them as such, while having the right platform, can tap into better inventory management and ultimately help improve the supply chain. It can also widen the supplier network. “The moment we enable supplier collaboration, it instantly connects an organization to a wider range of suppliers across the globe, and the power of global negotiation.”

Suppliers as business partners can also mean the difference when recovering from disruption. To Mathew, it means risk mitigation. Take shortages in raw materials as an example. “The ease of collaboration, processes and technologies built collaboration allow companies to pivot to another supplier, an alternate source of supply, or to work with their supplier to figure out how to build up capacity for the raw materials required.”

Focus then scale

Leaders who want to build in a single kinetic procurement platform will find that working with a ready-made system gives them a jump start for much of the transformation so they can focus effort and resources on the processes that are unique to them. Says Panakanti, “Seventy to eighty percent of processes are common across industries. Having a ready-made platform allows leaders to slowly tailor the system to what they need and that is unique to them in the market – their secret sauce.”

Massive, multi-year, end-to-end transformations were necessary because systems were built that way. That’s not the case any longer. “Now it’s possible to modularize the transformation itself,” says Mathew. “Focus on what is the business problem that you're trying to solve and solve it fast. Then you can scale out from that point.”

Want more transformation insights from enterprise leaders? Visit deloitte.com/SAP to download future podcast episodes or listen to previous ones.

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