Direct procurement needs to be involved in all of a company’s business strategy decisions from the very beginning, says Georg Roesch, vice president of direct procurement strategy at Jaggaer.
Direct procurement –—buying everything that’s needed to build your product — can’t be siloed if a company wants to succeed, Roesch says. “If everything is done within engineering, what should procurement do, negotiate two or three percent? That’s not a value driver for the organization. But when procurement is involved earlier, they can be an adviser to the business and influence the ESG [environmental, social and governance] strategy and risk profile of a company. This is why I’m a very strong believer that the early involvement of procurement is such a key value driver.”
During COVID-19 and in the post-pandemic years, managers learned just how fragile their procurement systems were. High-performing organizations identified where the gaps were and moved to fix them. But all procurement operations must realize that it’s make-or-break time, Roesch says. “If you correct the errors of the past, you will succeed.”
One of the areas to be addressed is decision-making. “When you look into the past to see how decisions have been made, they have been to a very high degree cost-focused. Other aspects have been very much underrepresented.” Fortunately, he says, that’s changing.
“What you’re really seeing is how companies take in data. We all want data-driven decision-making, right? It’s not gut feeling that we’re doing here anymore.”
Moreover, data collection has to be not just real time but continuous. “What is relevant is that we always know what’s going on,” Roesch says. “So we have to always be on top of things. Our strategy building must be based on the latest information, and that we have the adaptability to work with changes. That’s really what we want to do.”
