Empowering Enterprise Agility
Empowering Enterprise Agility
The new procurement landscape
Global supply chains are evolving. Where procurement executives once focused on engineering stability into their supply chains, it has now become clear that there is no longer such thing as a fail-safe design. After multiple years of unprecedented events – from extreme weather events to rising inflation and looming economic uncertainty – procurement executives are reevaluating their approach to building and maintaining a resilient supply chain while balancing pressures to increase savings and cut costs.
Those who want to grow and thrive in this new reality must embrace change as their only constant, abandoning the old idea that supply chains should be engineered to reach a hypothetical, static, optimal state. Instead, successful procurement organizations must embrace agility as a state of mind, and commit to continually renewing, reorganizing, developing, and experimenting.
The Hackett Group’s 2023 Procurement Agenda and Key Issues Study surveyed leaders of mid-sized and large enterprises around the world and found:
Thriving in a changing procurement landscape
Remember when there was such a thing as normal? When The Hackett Group began conducting its annual research into procurement priorities in late 2021, they found that only 11% of procurement executives expected instability to continue into 2023 or beyond. Now, their 2023 report shows that 66% of executives cite a pending economic downturn or recession as their top concern for the coming year.
Instead, procurement leaders are embracing a new normal, as they work to transform their organizations by facing today’s challenges head-on.
But while these financial responses can help organizations survive in the short term, leaders must also develop long-term, holistic strategies that encompass not only finance, but people, processes, and technology to transform and grow their organization in the new age of disruption.
A recent survey of over 100 US manufacturing executives and other senior leaders found:
Accelerating digital transformation
Recent research by The Hackett Group found that digital transformation remains a top leadership priority to prepare for the looming economic downturn, as organizations search for opportunities to increase efficiency and maintain value in the long-term. However, they also found that 42% of organizations still have legacy solutions they say must be replaced, as applications and functions move increasingly to the cloud. A further 38% those same legacy systems are actively limiting their agility, reducing their functional capabilities, and limiting ability to be competitive.
Of the global procurement leaders surveyed,
Agility as a state of being
While agility can sometimes feel like a nebulous term, organizational agility at the enterprise level can be even more elusive. In theory, agility is the ability to anticipate or sense disruptive events and quickly adapt to changing stakeholder needs.6 It is the bedrock of resilience, as agility allows organizations to respond quickly amid disruption, which may make all the difference in today’s procurement landscape.
In practice, agility is an ongoing commitment to learning and cross-team collaboration, breaking down silos within and between finance, people management, operations, and IT to align and scale business capabilities with evolving customer needs.
It's time to meet the moment: Procurement leaders must embrace agility as a state of being.
Redefining efficiency – doing more with less
There’s no getting around the elephant in the room — economic uncertainty almost always results in budget cuts, delays in spending, and increased financial oversight. These are defensive strategies, designed to protect existing resources, but often result in an imperative to ‘do more with less.’
To reduce pressure on their teams and lay the foundation for long-term success, procurement leaders can take the opportunity to turn their investments inward, focusing on their existing people and processes to find opportunities to increase efficiency, reduce operating costs, and identify savings opportunities.
1. Empower employees and improve coordination between teams
Delegate non-essential purchasing decisions to those closest to the issue, eliminating time- consuming, cross-team approval processes and freeing up valuable time. The right system requires little to no onboarding and can make it easy for employees to compare prices, evaluate reviews, and get what they need when they need it.
2. Improve cost savings while increasing selection
Digital solutions enable access to multiple, competing sellers, allowing purchasing teams to remain agile with improved price transparency and no long-term commitments, purchasing thresholds, or minimum buys.
3. Ensure compliance with digital tools
Partner with your finance team to identify and leverage the right tools to track, report on, and ensure purchasing compliance, using controls to drive adherence to organizational policies and preferences. This is also a great opportunity to advance sustainability initiatives by identifying and driving spend toward diverse, local, or certified sustainable suppliers.
4. Evaluate your existing procurement ecosystem — is it meeting your needs?
Take the time to map out a big-picture view of spend across your organization. Where are the gaps? Are there legacy systems that are slowing your organization down? Create a clear picture of your technical debt, and the risks it creates, so that you can make important technology decisions that will mitigate these risks while increasing your operational agility.
Industry Spotlight: Empowering Employees with Lippert Components
Lippert Components is a company that’s always on the move, having grown from the founder’s garage in 1956 to a world manufacturing powerhouse with $1.7 billion in annual revenue, 52 facilities, and 8,000 employees.
Lippert Components wanted to relieve its IT staff of their burdensome purchasing responsibilities, so the company modernized its purchasing workflow by enabling plant workers and other staff to buy for work directly on Amazon Business, removing the need to go through the IT department for a wide range of indirect materials. Now, Lippert Components can manage purchases in one place, from invoicing to payments to reporting
Vince Doepker, Vice President of IT Operations, tells us how the company used Amazon Business to move purchasing responsibility off the shoulders of IT and into the hands of employees, where it belongs:
“While our manufacturing plants use state-of- the-art technology to reduce costs and drive innovation for customers, until recently, our company’s purchasing processes lacked that efficiency. Whenever a worker needed to order a computer mouse or other consumables, the request went through our IT department. This took precious hours away from our technology professionals, which we could put to better use elsewhere. There’s really no added value for us in managing employees’ everyday purchasing needs. We want to be more productive and spend our time making Lippert’s IT systems work better, not shopping for keyboards. When we learned about Amazon Business, we saw an opportunity to address this challenge. We set up an Amazon Business account and began allowing factory personnel to shop for work directly on the marketplace.”
"Overall, Amazon Business gives our IT team more time to do what we’re good at and makes us a more agile company."
— Vince Doepker, Vice President of IT Operations, Lippert Components
Technology that simplifies: Leveraging flexible technologies to boost spend intelligence
The 2022 Gartner Report, Grow Revenue and Reduce Recession Risk by Clearing Technology Debt, asserts that technology debt is created when “a legacy asset is used beyond its valuable life.” Proactively addressing this debt reduces downtime and accelerates decision-making; both capabilities are important components of agility, and, ultimately, resilience.
It can be difficult to build the momentum necessary to address and eliminate this debt even in stable economies. However, it is essential to identify and address these potential risks in times of uncertainty, as doing so can introduce important revenue, agility and innovation opportunities.
To begin this process, start by asking yourself what you can and cannot audit. Are there answers you wish you had, but can’t find? Are critical business functions, like tracking unplanned spend, being managed in an app, system, or spreadsheet not designed for that purpose? And, finally, can you trust your data to transition smoothly and accurately between systems, so that you can leverage it when it comes out the other end?
Once you have a clearer view of your technology deficits, you will be ready to identify a solution. Avoid the urge to avoid a decision until the economy has improved or the most recent disruption has passed — inaction can be far more risky than action when it comes to eliminating unnecessary technology debt and offloading systems that prevent or limit agile decision-making in today’s fast-paced, disruptive environment.
"Doing nothing about depreciated assets and legacy contract renewals is a passive decision that can directly or indirectly cost your organization more."
— 2022 Gartner Report: Grow Revenue and Reduce Recession Risk by Clearing Technology Debt
In a world of uncertainty, you need a partner that has the tools, resources, product selection, and experience to help reduce your risk, gain visibility into tail spend, and diversify your supplier base. Prioritize solutions that are:
- Configurable, able to integrate into your current eProcurement environment at multiple stages of a transaction
- Flexible, with access to a wide range of suppliers and a vast selection of products to allow your teams to keep moving when faced with the unexpected
- Scalable, with expanded operational capabilities beyond just software products, but also partnerships and services to help you accelerate growth
- Optimized, with a straightforward user experience that allows for easy navigation, convenient and reliable shipping options, and detailed data analytics that provide visibility into unplanned or ad hoc spending patterns
"Tail spend is generally defined as the amount of money that an organization spends on purchases that make up approximately 80% of transactions but only 20% of total spend volume. As this characteristic suggests, tail spend transactions are mainly low-value, and often one-off purchases, which go out to a wide array of suppliers."
— Deloitte, Innovating Tail Spend Management: An opportunity to improve P&L and working capital, 2020
Amazon Business Integrations
Amazon Business is committed to creating smart business buying experiences for organizations of all sizes. Integrations combine the ease of Amazon Business with a wide variety of e-procurement and expense management systems, providing quick and secure access to hundreds of millions of products on Amazon Business.
Embracing long-term innovation: Building scalable partnerships
Finding the best solution for your business is more than purchasing software – it’s about building a digital ecosystem, and choosing one of many components that must interact in an integrated, scalable, agile way. Deloitte notes that the power of these ecosystems are derived from the “network effect,” a phenomenon in which the value of the ecosystem increases or decreases based on the number of stakeholders within it.
Deloitte surveyed IP&C leaders and found:
"By 2026, more than 50% of large organizations will compete as collaborative digital ecosystems rather than discrete firms, sharing inputs, assets and innovations."
— 2022 Gartner Report: Grow Revenue and Reduce Recession Risk by Clearing Technology Debt
Industry Spotlight: Building better processes with Honeywell
The Honeywell Heating Specialty Co. was formed in 1906, built around a revolutionary new mechanism for heating water. Over the next hundred-plus years, Honeywell transformed into a massive enterprise with a footprint across industries as diverse as aerospace, specialty chemicals and pharmaceuticals, along with a large portfolio of technology services.
Supplying its workforce – stretched across more than 70 countries – is no easy feat, given the range of needs across each business. “We need everything under the sun, from things as common as pens and paper to special metals and coatings capable of going into space,” says David Canales, manager, strategic sourcing at Honeywell.
“We want data availability and accuracy across our businesses, as well as a consolidated procurement system allowing us to capture the indirect spending needs in a single place,” Canales says. To that end, Honeywell has integrated Amazon Business into its e-procurement ecosystem, helping to consolidate suppliers and bring agility to purchasing by automating many functions that had been done manually.
Canales points to the usability of Amazon Business as a major plus, noting that employees at Honeywell are accustomed to making purchases in their daily lives on Amazon.com. Doing so at work with Amazon Business provides the same type of easy buying experience, removing complication and friction from the purchasing process.
“We not only use it for our tail spend, but are delighted to be able to discover our hard-to-find items and maverick spend that is underserved and undermanaged,” Canales says. “Amazon Business allows us to have great reporting, which helps us identify opportunities. And we can use it across all our businesses, through a purchase order or a p-card, opening up a larger population of people who can access procurement tools.”
Canales says that as technology helps digitize and automate considerable portions of the procurement process, it frees up enterprises to be more thoughtful and innovative around purchasing. “Procurement and sales are moving away from the transactional piece that was an inherent part of it for years and toward something more automated,” Canales says. “We’re going to have more valuable conversations on partnerships, on ideas, on projects, on initiatives. It’s much more now than ‘Send me the product’ and ‘Is it coming on time?’
Embracing long-term innovation: Prioritizing sustainable procurement practices
Procurement’s ability to direct spend uniquely positions them to help drive their organization’s broader social responsibility goals. In 2023, KPMG predicts heightened focus on Scope 3 emissions control, and a rapid shift in investments from global banking institutions, private equity, and venture capital toward organizations who can prove their emissions are low. This means many organizations will need to identify and select partners that meet high supply chain standards, comply with applicable environmental laws, and help them meet diversity goals.
Take the time to assess whether your current suppliers and partners meet sustainability and social responsibility standards. And, when evaluating new suppliers, screen their business practices to ensure they meet your organization’s sustainability and social objectives.
Consider the following screening criteria:
Move your organization forward with Amazon Business
Procurement has played a key role in reducing costs and navigating new supply chain realities, and the current state of disruption means there is no time to stop. It is time to embrace agility and lead your organization through accelerated growth and new strategic challenges.
We’re ready to help you drive real results with flexible solutions, powerful integrations, and beneficial partnerships.
Solutions that fit your organization: With purchasing features and tools from Amazon Business, you're equipped to do more.
Simplify buying
With Amazon Business, you get the familiar purchasing experience of Amazon, with features that make it easy to buy for work, so you have more time to focus on what matters most.
Increase operational efficiency
Flexible controls let you manage purchasing in ways that are unique to your organization, letting you deliver more value than ever before.
Reduce costs
Get more for your money with Amazon Business. Whether you’re a growing startup or an established enterprise, we’ll help you improve your bottom line.
Accelerate your path to more responsible purchasing
Amazon Business combines procurement expertise with curated solutions to help organizations define, meet, and measure their social responsibility and sustainability goals.
Learn how you can uncover valuable purchasing insights to cut costs, increase efficiency, and drive growth
