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8 Competing Priorities that jeopardize margin improvement initiatives from procurement

Business | October 10, 2021 | By zumen 8 Competing Priorities that jeopardize margin improvement initiatives from procurement


The story goes like this: the CFO is asking for a percentage point cost improvement in the Gross Margin from the Procurement Team in the next Fiscal.Procurement team

This is the most attractive to the CFO as this does not involve the engineering folks requiring redesigning and testing any parts and any additional Product Programs that invariably require additional Capital and tracking…

Unfortunately, what this means is that the procurement team will have to stretch.

Here are 8 Most Common Competing Priorities
  1. New Product Programs that require Sourcing
  2. Procurement Head-Count Reduction Target
  3. Newer Sourcing & Purchasing Process Compliance Requirements
  4. Pilot Project for Sustainable Sourcing
  5. Supplier Diversity Program
  6. Risk Assessment Program with Quarterly Reviews (…Trying to implement our lessons learned from the latest Geo-Political Scenarios and the Pandemic)
  7. Short-Term & Long-Term Reshoring strategy
  8. Newer & Younger Staff going through the learning process.


It is not hard to see that most things here actually drive up costs whereas, as a whole, Procurement organizations have a target to reduce the cost.

Given we truly are at an inflection point globally, with the pandemic, climate change, and trade risks, we just don’t have a choice but to heed to these.

But how would a team of hard-working people, already going through the rough times in their personal lives due to the very same factors, stretch beyond their means. Being a strategic decision-maker, quality of data plays a key role, and having the right source to pay tools And to close the vicious cycle, it is all the more important to improve the profitability to preserve the business and the jobs.

This is where technology can help.

  • Let us take a quick stock of what activities in the daily routine of our procurement teams are mundane, routine, and not very motivating.
  • And what are the management requirements that are highly critical but distract the procurement staff from their work on any of the 8 items above?
  • During the manual processing of the sourcing status reporting, how often does the sourcing program manager have to download the report from the ERP and then process them in the spreadsheet?

Technology here can also ensure the efforts of the staff are backed by a seamless follow-up and certainty of closure.

Source-to-Pay suites like Zumen are not used only for managing transactions but it provides strategic benefits, effectively manages procurement processes and redefines the way the supply chain is handled today. They Improve accuracy to almost 100% so there is no need for checking & re-checking; Leveraging Artificial Intelligence & Machine Learning to read through the supplier quotes/ invoices that are otherwise intellectually less-pleasing. They provide Live Project Dashboards so the procurement staff can focus on what needs to be done instead of explaining what they have done and how far they are from the targets. Source to pay suites also help in deploying the best practices and help in reducing “GO TO Market“ time in New Product Development.

By offloading some of these from the Procurement Staff, the companies can free up some time during the workday so they can work on the new initiatives; Using data and analytics for improved visibility of the supply base, costs, risks, and opportunities.

So the procurement staff can use this technology-aided productivity improvement to select specific cost improvement initiatives for maximum bottom-line impact.

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