Procurement may want a seat at the table, but the function is saddled with a perception problem. According to a research study by global consulting firm Kearney, more than half of CFOs surveyed see procurement as a transactional department that’s good for negotiating hard cost savings, but not as a strategic partner that adds value.
Herein lies the challenge: Procurement is associated with routine processes and administration. It cuts costs, but it won't elevate executives to the C-suite. To be there, they must drive innovation and value.
In considering the answer, it may be helpful to implement a bit of a mind shift. There's no real "seat at the table." Instead, there are hundreds of decision-making tables throughout the organization and no one can be present at all of them, all at once.
To secure its figurative seat, procurement must redefine its role and highlight how it can demonstrate new possibilities and new avenues to achieving company goals. It needs to acquire the seemingly superhuman ability to be at all of those decision-making tables at the same time, adding strategic value to every business unit.
How? Let’s start with what the C-Suite truly cares about, especially as we head into 2024:
1. Unlocking innovation
Cost-cutting is definitely on the minds of CFOs, but they also know that it’s not possible to cut one’s way to growth. Rather, what’s needed is to unlock innovation across the organization, enabling every employee to achieve more by removing obstacles and helping them focus on their core work.
How can procurement do that? By bringing sourcing down to the level of the employee, enabling “autonomous self-sourcing.” Giving employees the ability to source their own products and services quickly will dramatically speed up business outcomes, raise the level of productivity across the entire workforce, and—as a result—unlock innovation. When employees have more time and focus for their actual work and spend less time slogging through purchasing cycles, the entire business benefits.
But how is it possible to give employees that kind of power? Doing so ties into a second major priority of the C-suite, which is:
2. Generative AIIn 2024, every business function needs a Generative AI story and procurement is no exception. AI that enables autonomous self-sourcing across the organization by equipping employees with the AI-powered guardrails, security protocols, and friendly, guided support that allows them to perform their own sourcing.
Globality’s AI, years in the making, ensures that all sourcing is done according to business protocols and processes, but it also demystifies the process and speeds up the outcome so that every employee can act as a procurement professional.
As mentioned, no one has the power to physically be at every decision-making table at once. But with AI, it’s not necessary to do so. Rather, AI gives procurement leaders the ability to be everywhere -- guiding each business unit to strategic outcomes with the power of autonomous self-sourcing.
An important consequence of this AI-powered procurement cycle will also get the attention of the C-suite: by bringing employees into the sourcing process, procurement has the incredible ability to meet business leaders “where they are” and transform indirect spend into a massive cost savings for the company. In many cases, indirect spend can be as high as 10-20% of a company’s revenue, resulting in a significant loss of operating capital.
If all indirect spend becomes controlled with AI guardrails in place spend and the ability to negotiate and bring down contract prices effectively – companies can save more than $10 million for every $1 billion in revenue.
Procurement perfected
So procurement definitely can have a seat at the table – or, to be more specific, procurement can be seen as a strategic player that’s on par with anyone in the C-suite. It can do so by helping unlock innovation and unleashing employee productivity through the power of AI. And as a result, it can help the company recover tens of millions in dollars that would otherwise be lost due to poorly managed indirect spend.
That’s an outstanding story for procurement leaders to tell as they head into 2024!
Globality can help. Talk to us and let’s discuss your AI strategy for the New Year and beyond.