Procure to win & accelerate growth!

As we all know, in many service sector organisations, the procurement function is still leveraged at a very tactical level for on-boarding vendors, S2P (source to pay) / P2P (procure to pay), cost reduction, etc. However, have you ever wondered if it can be leveraged to win new business? Yes, new business!

 In today’s world, for any business to be successful, it needs extensive support from the supplier ecosystem, not only to sustain the business but also to scale. In the service sector, this holds even more because organisations are increasingly looking at service providers to own the multiple technology products that are involved and provide the entire solution “as a service” rather than individually dealing with multiple vendors. Not only does this add to cost and complexity but it also expands the liability for an organisation. To cater to this need, a service solution provider needs to have a strong and competitive partner connect. The composite value of the entire solution that it offers should not only be better than its competitors’ price point but it should also be less than the TCO if the client were to maintain the suppliers on its own. Hence, in deals where there is a 3rd party component, the procurement function should be involved during early stage of business pursuit. Its representation should also be client facing. This is because customer representation is not only limited to the project sponsors & SMEs but also has Vendor/Procurement/Contract managers as signatory authorities who give due importance to how the supplier liabilities have been multiplexed in the solution. The kind of knowledge the procurement/vendor management team can bring to the table will be invaluable, like commercial bench-marking, market trends, cost of ownership, third party supplier risks, etc. Service organisations should help their prospective clients understand that not only does the dedicated sourcing and vendor management team leverage economies of scale and bring in best commercial models but it also manages the entire supplier governance from transition to delivery. To ensure seamless support, the procurement teams should also be trained in the product technology so that they are aligned with the business and solution, in a way integrating them into the business unit itself. They can go a step further by being direct revenue generators by building synergy across suppliers and creating joint offerings that can be taken to the market. Needless to say, the companies who have adopted this model are seeing huge success and for the rest, a huge opportunity is waiting to be tapped.

 Procurement function is not just an enabler but also a competitive differentiator!