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A rapidly growing social media company was convinced they needed a new P2P solution to simplify their end-user experience, improve process efficiency, and drive greater PO compliance. After we helped them dig deeper into the problem with a Design Thinking approach, we collectively realized that they did not need new technology. Instead, they needed a different type of service that would provide a better user experience. A “white glove” service model was implemented to address their biggest pain points and simplify the end-user experience, resulting in a 30% improvement in process efficiency and a 600% increase in POs.
This situation is not unique to this particular client. Most high-tech companies feel immense pressure to quickly bring an innovative product or service to market. Oftentimes, building the ideal procurement operating model to help the business grow and scale is an afterthought. That’s because at the onset, high-tech enterprises are less focused on profitability and more focused on growth and valuation. It’s not until growth outpaces procurement’s capacity and ability to support it that these organizations search for answers. That’s why nearly all high-tech procurement organizations struggle with growth, speed-to-market, and business scale-up challenges.
Yet, there are helpful steps to take to tackle these challenges. Consider these four critical elements for improving the procurement operating model in your high-tech organization:
Develop a clear strategy. Together with legal and finance, agree on what the procurement operating model needs to look like for your unique ecosystem. Make sure your operating model is aligned with the larger goals and objectives of the organization, so that procurement’s focus is centered on strategically helping stakeholders achieve those agreed-upon objectives.
Build scalable operations. Common in start-up mode is the push to solve the “now” problem. It’s like treading water to keep yourself from drowning. But if you don’t think ahead and plan for how to scale-up your operations, you’ll find yourself continuing to tread water instead of purposefully swimming forward. Look inward and think long-term with your operating model.
Identify the best digital enablers. Technology is never the only answer but using digital solutions to automate manual processes and transactional tasks frees up time for people to be more strategic and proactive. Digital procurement solutions, when smartly deployed, will aid in improving efficiency, accuracy, and speed.
Find and frame the actual problems. A thoughtful analysis of the real pain points for stakeholders – not just what procurement thinks they are – helps identify solutions that deliver greater value for end-users. Follow Design Thinking principles when solving problems so that you put yourself in the shoes of your stakeholders and appreciate their perspectives.
Unlike other more established industries, high-tech companies tend to partner with other organizations to access innovation and stay in front of their competition. It should come as no surprise, then, that high-tech procurement organizations often partner with third-party service providers to help improve or revamp their procurement operating models.
When we are approached by companies in the high-tech space, we advise them to focus on several areas as they strive to grow, increase speed-to-market, and keep up with the fast-paced demands of their business, including:
Concentrate on Category Management. Category expertise and strong stakeholder relationships are essential to the procurement team’s success. Optimally, Category Management should remain a retained and valued capability. Your third-party support provider can then take on execution and transactional procurement activities that keep your operating model running smoothly while you increase the depth of internal category expertise.
Set your teams up for success. Regular workshops and training provide your internal team with the tools and knowledge required to stay current and succeed. Never underestimate the importance of investing in levelling up your talent.
Keep up with changing sourcing demands. Supplement your in-house team’s capabilities with third-party support when expanding into new geographies, taking on new categories, and adding critical sourcing and contracting capacity.
Deploy the right digital enablers. Technology automates processes and improves the end-user experience by making it easy to engage with procurement.
Ensure you have the right procurement operating model. When developing and evolving your procurement operating model, focus your efforts on the business outcomes your particular organization is trying to achieve. Understand that growth and capturing market share may be more important than the traditional metrics by which procurement is measured. Then gear up to support the most important business outcomes.
As you move forward on your transformation journey, remember not to get too caught up in “best in class” procurement standards overall. Instead, ask yourself, “What does great look like for us?”
Then, you can build a vision for procurement that is aligned with your maturity level, capabilities, and strategic objectives. We offer this type of advice and actionable insights for high-tech companies in our next-generation operating model paper and our digital roadmap handbook. Download these resources or reach out to our team to learn more.
Senior Vice President, Sales
Greg Anderson is Senior Vice President of Sales in North America at WNS-Denali. He is a proven expert in Supply Chain and Procurement Managed Services and Technology solutions. Greg has over two decades of cross-industry sales and marketing leadership experience. Prior to WNS, Greg held leadership positions at Ivalua, Pensiamo, Directworks, Tenzing Consulting, SmartOps, Ariba, FreeMarkets, GE, and PPG.