eSourcing software is a secure, centralised online environment that helps procurement departments streamline and expand their buying process. It facilitates faster, better, and more diverse tender opportunities, ultimately helping organisations to generate savings in time and costs and mitigate supply chain risks.
The traditional purpose of sourcing was to get the best deal or price. This is still true, especially in an inflationary market, but there are many more layers of complexity. Managing cost savings has been joined by resilience, agility, ESG obligations, compliance and all bound by the requirements of devising both short term and long term strategies.
In the latest of our eSourcing articles, Canda Rozier, experienced CPO & procurement evangelist, talks about how procurement can balance short term goals with long term strategies to meet the growing complexity of the sourcing landscape.
In the world of procurement, a unique challenge awaits those who strive to find equilibrium between short-term procurement projects and long-term business strategies. It’s a tightrope walk that, when mastered, can lead to remarkable and sustained success. Let’s look at why it’s important to achieve this balance, and what are the implications of neglecting it in your procurement activities.
To begin, let’s distinguish between short-term and long-term procurement goals.
Short-term procurement goals are the ones ‘in’ the business. These encompass immediate objectives such as cost savings, supplier negotiations, and the day-to-day activities that keep your procurement and Source-to-Pay (S2P) engine running smoothly. They are essential for the short-term health of your procurement department, and your internal customers would immediately say you are failing if you don’t deliver on these.
Finding equilibrium between short-term procurement projects and long-term business strategies is a tightrope walk
On the other hand, long-term procurement goals are those ‘for’ the business. These are more visionary objectives that extend beyond the horizon of the current month, quarter, or budget year, or the current ‘fire drill’ emergency that requires procurement to “fix it now!”
These long term goals are necessary to becoming a trusted partner to your stakeholders, nurturing supplier relationships for the long haul, and embracing sustainability as a fundamental aspect of your procurement strategy.
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Focusing solely on short-term procurement objectives can be risky business.
Consider the cautionary tale of a mid-sized global technology firm, let’s call them Company X, which became so engrossed in immediate cost-cutting measures that they failed to nurture supplier relationships. As a result, they experienced a catastrophic supply chain disruption, leading to production delays and significant financial losses, and reputational damage in the market.
Neglecting long-term strategies in procurement not only can jeopardise the company’s bottom line but also undermine the effectiveness of your procurement department. It won’t take long for procurement to be seen at best as a hindrance, and at worst as a problem that needs to be addressed.
It’s crucial to strike a balance between short-term and long-term procurement goals
OK, let’s delve into why it’s crucial to strike a balance between short-term and long-term procurement goals.
When you simultaneously pursue short-term wins and long-term visions, you create a robust foundation for your procurement activities, and your internal customers, and executive management takes notice.
Firstly, this approach fosters financial stability. While short-term goals may generate immediate savings, long-term strategies can help secure your financial future. A diverse supplier base, for instance, can shield you from unexpected shocks in the market. A thorough and smoothly executed supplier risk program can help protect from supply chain issues, cyber attacks, and reputational damage to the corporate brand.
Secondly, building strong mutually beneficial supplier partnerships is essential for long-term success. By prioritising both short-term negotiations and long-term relationship-building, you become a preferred customer for suppliers. This can translate into better prices and terms, preferential treatment, and a more reliable supply chain.
Lastly, balancing short-term and long-term procurement goals enhances risk mitigation. When you invest in sustainability and diversify your supplier base, you’re better prepared to weather unforeseen challenges like natural disasters, geopolitical disruptions, and supply chain disruptions—all of which are becoming increasingly pertinent to procurement’s role.
Balancing short-term and long-term procurement goals is easier said than done. Here are six key strategies to help you navigate this delicate tightrope.
1. Set Clear, Measurable Goals
Clearly define and measure your short-term and long-term procurement objectives. Use the SMART (Specific, Measurable, Achievable, Relevant, Time-bound) framework to ensure your goals are well-defined and map to the larger corporate objectives.
2. Effective Resource Allocation
Allocate your procurement resources thoughtfully. Ensure that short-term needs align with long-term objectives. Sometimes, a short-term investment in your team’s resources can yield long-term benefits.
3. Flexibility within Procurement Projects
Flexibility is essential. Markets, organisations, and circumstances change, and so should your procurement strategies. Be ready to pivot when necessary, without compromising your long-term vision. Change is not only inevitable; it is often a catalyst for growth and opportunity.
4. Walk the Talk with a Culture of Procurement Balance
Instil a culture within your procurement organisation that values the balance between short-term and long-term procurement goals. Lead by example and encourage and cultivate cross-functional teams to contribute to both objectives. It’s a somewhat over worn adage, but “be the change you want to achieve”.
5. Foster Innovation and Adaptability
Innovation is key to long-term success. In fact, without it, you are unlikely to be successful in the long term. Encourage your procurement team to explore new ideas, technologies, and approaches that can benefit both short-term and long-term goals. Innovation is contagious. As other departments and your internal customers see innovation coming from procurement, they will embrace it!
6. Recognise Contributions and Celebrate Successes
Recognise and reward employees who contribute to both short-term and long-term objectives. Celebrate successes both as a team, and if appropriate, in the wider organisation. This creates a positive feedback loop that encourages everyone to strive for continued balance of the short and long term.
To conclude, for procurement leaders, it’s not enough to focus solely ‘in’ the business or ‘for’ the business. To thrive and to really succeed, you must strike a balance between delivering on short-term projects and nurturing long-term strategies. In other words, you must focus on both, and be able to shift easily and seamlessly between the two perspectives.
This equilibrium is the foundation for a resilient, effective, and sustainable procurement function that is seen as a trusted advisor and strategic partner to the business.
Remember, it’s not about choosing one over the other; it’s about mastering the art of harmonising both. In doing so, you create a procurement powerhouse that delivers today and secures tomorrow.
Market Dojo Sourcing is an on-demand sourcing software solution designed to rapidly evolve procurement from a reactive back office function to a proactive strategic resource.
To see Market Dojo Sourcing in action either book a demo with our team today or sign up for a free plan to try out our unique sandpit feature which offers the full e-sourcing experience, from building events as a host, to experiencing them as a supplier.
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