Digitization has long been a focal point for procurement experts. Which areas in procurement have already been digitized?
Digitization in procurement has its roots in the operational procurement process (Procure-2-Pay), which connects
suppliers electronically and automates processes. Then came the tools to support strategic procurement, such as
tendering programs, eAuctions, and spend analytics. Such tools are relatively common nowadays.

But why are so many companies still reluctant to implement these solutions?
There is a multitude of tools out there right now; the market is a real minefield. What’s more, we often see a reluctance
to try to overcome the hurdles that you typically encounter in IT projects: high investments required and long, drawn-out projects, with lots of uncertainties due to the high complexity, plus the need for internal and external coordination – to create interfaces, for example.

The first step should be to take stock of your situation and evaluate potential opportunities. Ask yourself what can offer
the best possible support to achieve your corporate and procurement goals. Companies need to put together realistic
business cases and a market overview before making any decisions.

How does digitizing procurement actually benefit companies?
Significant efficiency gains! Strategic procurement delivers higher savings because it seizes price fluctuations, and
because there is generally greater market transparency. Using a catalog system, for example, also helps to minimize
maverick buying. Buyers can work together globally, so they can respond more rapidly to changing circumstances.
Routine tasks are also automated, leaving more room to act as innovation drivers and strategic partners.

Why should procurement play a more prominent role in innovation management?

As companies have already implemented and exhausted many of the usual cost reduction measures, we believe opportunities along the supply chains offer great potential. Collaborating with suppliers can produce solutions
that are attractive to clients while also boosting efficiency for both partners. Strategic procurement plays a key role in this since it can act as a matchmaker between the R&D department on one hand and suppliers on the other. But you need to have in-depth knowledge of the client’s needs to spot new trends early on and incorporate them internally.

And how do suppliers benefit from an innovation partnership?

Suppliers put themselves in an excellent position, as they gain detailed insights into trends and developments, as well as an early opportunity to get involved in market development and grow their business. It’s a classic win-win situation.

Which suppliers would be suitable for this kind of model?

Essentially: suppliers who work proactively and intensively to develop their products, who have already demonstrated that they are committed to cooperating, and that they are prepared to invest in joint projects. This kind of partnership only works if both partners are engaged in it, openly share knowledge, and adopt the same mindset.

What do buyers need to do to qualify suppliers as innovation partners?

Buyers must be closely involved in the internal product development process. They should be kept up to date with plans for new developments early on, to use their knowledge of the market and to identify potential partners. They need to have a

broad market overview and should be willing to initiate such a partnership. In times when collaboration is becoming more relevant in general, it’s important to overcome existing company silos, and for departments to work together more closely for mutual benefit.

But what do you do if a partner suddenly can’t deliver anymore?

Then there is no way to cover demand elsewhere. That’s where risk management comes in. This involves creating complete transparency in the supply chain, including knowing who your potential innovation partner suppliers
are. It makes sense to build up networks to identify and qualify alternative suppliers so that you aren’t reliant on a
single supplier or a single world region. Equally, you should be prepared to support strategically important suppliers in times of crisis. After all, the damage would be much worse if your partner were to go under. However, as our COVID study revealed, a mere 10% actually helped their suppliers, while 20% were unsure, and 70 % ruled out helping at all. Perhaps this is where we need a rethink.

Can’t that prove costly?

Strategic risk management is the art of putting a price on risk and then deciding how much you want to pay for greater
security. In recent years, this hasn’t been a significant factor in many companies because everything was generally running smoothly, save for a few instances of bad weather. However, the coronavirus pandemic has shown how quickly
global commodity flows can be disrupted and how even healthy companies can be hit hard by events they couldn’t
have foreseen. If you know your supply chain inside out, you could work with your suppliers to find solutions when
things like that happen.

What skills do buyers need to shape procurement successfully in the future?

Generally speaking, buyers need to be willing to work together and cope with agile working, whether they’re in a management position or not. Managers should always be open to new ideas and be highly self-motivated. One typical example is remote working, which required a lot of managers to learn how to manage cooperation virtually, both within a team and with external parties.

The ITC has trained more than 5,000 procurement managers over the years. What subjects do the training courses cover?

There’s a total of around 30 individual topics in procurement, which we can use to put together training courses, workshops, and coaching sessions to meet individual customer needs, e.g. negotiation training, data analysis, and risk management. In fact, traditional negotiation training and product group strategy development are the most topics
in demand.

What is a typical training course?

There’s no such thing! We develop each training course according to individual customer requirements. We come up with training scenarios so that attendees can apply them directly

to their day-to-day work. After all, a use case involving raw materials procurement isn’t much good for buyers in the retail trade. The practical design is also geared to the needs of the customer. We usually hold workshops at our premises or the customer’s site. Under the current circumstances, we are also offering completely remote training. In general, demand for classroom-based training
is falling, but on-the-job coaching is becoming more popular. This takes place in the person’s actual office, using real tasks from day to day work. Innovation management will feature high up on future agendas.

Are you already seeing this reflected in training needs right now?

Absolutely, especially within the product group strategies that need to be developed, or when working in cross-functional teams. This also includes topics like presenting and advising, which buyers aren’t used to doing. But if they are to introduce new market expertise in a team made up of different departments, they need to do it confidently. That said, the basis for these skills remains the same: buyers need to know their markets and suppliers like the back of their hand.