Here are my recommendations that will save you $300k in consulting dollars!
1) Build Fundamental Units:
You MUST have these domains in your CoE
a.) Process Efficiency, Governance, Digitization and Change Management:
Have 4 dedicated resources here and ensure you get at least ONE data scientist here. Yes! You need one.
KPI:
50k Man days saving/year
2.) Data & Dollars Team:
In other words, Negotiation Factory Team: My FAVOURITE! This is where you need data scientists who have procurement experience or Procurement managers turned into Data scientists. During every negotiation, these rockstars will bring actionable insights using external & internal data! Price and demand forecasting, negotiation strategy using historical data, market insights, and target pricing strategy in one action point.
KPI:
- % spend covered under Negotiation factory (i.e. 80% accuracy in demand and price forecasting)
- % cost savings projects accepted by BU for execution (This is where we analyse data and recommend cost-saving opportunities)
Ensure you are onboarding data scientists with procurement domain knowledge. You may need to pay them higher here, but it is 100% worth it! Ensure they are spend analysis wizards!
Get at least 1-2 data scientists and top up by 1 data scientist per 1,000 sourcing events/annum (RFP, RFQ, RFI, etc.). Share resources, if possible.
3.) Master Data Management (Supplier & Material Codes) and Reporting:
This should be outsourced but actively managed. Moreover, have one person manage this.
4.) Risk and Supplier Management + Operational Excellence:
Again, use Data scientists to build an early warning system for Supply Chain, Cost/Inflation, and Inventory Shortage risk.
Here is my favourite task
- Build a data-driven Operational KPI monitor (Savings, Cycle Times, Productivity, Supplier Performance, SLA compliance, etc.), but make sure the monitoring system is predictive, i.e. 2 months forward.
I am currently experimenting with this in my Procurement Lab, which looks fascinating. It should give trends on whether KPI will be met or likely to fail!
New Focus in 2024: Fraud Management. I will be building on this quite a lot.
5.) New Supplier Base + Alternate Product Development + Startup Collaborations + Freelancer Collaborations/Outsourcing:
My POC champion, in short! Have one dedicated resource to constantly build alternate suppliers (to reduce single source spend and find lower cost suppliers) or build alternate products that are cost competitive. Also, this resource should work with Startups under the above-mentioned objective.
If work needs to be outsourced, this person should be able to recommend high-quality verified startups/freelancers!
6.) Sustainable Sourcing Personnel:
Self-explanatory! ESG, hello!! You need to own this up now!
Did I miss anything? Let me know in comments!
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