Depending on your business sector, the department you work in or your job function, innovation means different things to different people. Procurement professionals may view innovation as a long-term strategy, given the tremendous potential for delivering efficiencies and cost savings over time, while other business functions may see it differently. Their interest might be focused on enhancing performance and processes, delivering slicker workflows or increased speed to market.
Growing economic uncertainty has seen many businesses look to procurement for a means to increase savings and ultimately drive growth. This is especially true in the retail industry where common issues include mounting costs, struggling suppliers, increased competition and expanding supply chains. On top of this, savings must be achieved without affecting the quality of the end product or customer experience.
There always seems to be plenty of commentary around what’s driving innovation and growth in both large enterprises and startups. By comparison, the mid-market seems slightly neglected; this seems an oversight given the crucial role it plays in the UK economy. Although this market segment represents just 1% of UK firms, medium-sized businesses are increasing revenues by an average of 6.7% each year and the mid-market is expected to boost the economy by 18% over the next five years.
Congratulations! It’s been three years since you decided to outsource accounts payable. Or, accounts receivable, or customer care, or payroll, or HR, or procurement, or any one of a dozen business process functions typically outsourced, in part or in full. You’ve finally stabilised operations, established consistent market standard processes, addressed the fears from the field, started realising those projected savings, and convinced IT that it is possible to improve response time without creating a horrific security breach.
As the drone flew over the factory in North Carolina and captured pictures and videos both inside and outside the factory, little did the company whose factory was being photographed realise that their practices would be questioned. Here is a factory that processes pig meat. The way the factory is designed is to optimise the number of pigs and the weight of these in order to get maximum production out of it. So, what is wrong with all this?
Emerging technology services have revolutionised the sourcing industry. These disruptive technologies like autonomics, interface technologies, big data analytics and other computing technologies have permitted smaller companies to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they may exceed the needs of some segments and ignore the needs of others.
As regulations and consumer pressures shift and organisations are increasingly exposed to risk – reputational and beyond – the procurement industry faces a critical juncture. This dynamic has created a business environment where sustainable procurement programs are no longer just nice to have, but an integral organisational function that is responsible for protecting and improving brand reputation, driving revenue and mitigating business risk.
John Wanamaker once commented, “I know half the money I spend on advertising is wasted; the trouble is I don't know which half.” Likely this is often said of marketing as a whole - and in fairness, applies to other business functions as well. Have you struggled with this conundrum when considering your sourcing options for marketing spend? Proper mechanisms to track performance, ROI, and effectiveness need to be in place to ensure that the money spent is adding value and not being spent because you have always done it that way.
Raleen Gagnon is Director of Global Market Intelligence at ManpowerGroup Solutions, overseeing research and analysis related to global workforce trends, competitive workforce strategy, labour regulations, cost of labour, and hiring practice. Outsource got together with Raleen at last October's SIG Summit in Carlsbad, California, to hear about some of the key developments in the global labour market - and how procurement departments need to refine their approach to procuring people...