The 2023 Procurement Revolution: A Winning Response to Supply Chain Challenges

Discover the resilience actions every CPO should be implementing right now.

2023 is shaping up to be another rollercoaster year for supply chains, with volatility and inflation showing no signs of abating. But what if I told you that leading procurement organisations are not just surviving but thriving in these challenging conditions?

In this article:

- Uncover the resilience actions you need to defy the toughest procurement challenges.

- Learn how some procurement leaders are outpacing the competition.

- Discover real-world examples of these actions in action.

**Procurement 2023: A Resilience Revolution**

The traditional procurement models are becoming obsolete. Instead, a category-level response is essential. Leading companies are deploying their talent, technology, and insights into the world’s complexity, creating a competitive edge.

"The winners in 2023 are those who dare to reinvent procurement, making it a central pillar in their company's response to the current context." - Roman Belotserkovskiy, McKinsey’s Operations Practice

**The Core Actions to Defy Procurement Challenges**

These actions range from gaining transparency into the pressures you face to building an agile procurement function. They require mobilising other parts of your business, supported by a central nerve center, a control tower, and new capabilities.

Techniques for Applying the Actions

1. Gain transparency: Use a digital twin to understand your upstream value chain and continuously identify and update risks.

2. Partner across the supply chain: Refresh category strategies and enhance your risk operating model to drive efficiency and resilience.

3. Partner across operations: Optimise operations from end to end to mitigate risks and take advantage of opportunities.

4. Conduct Supplier Development Programs: Provide training, support, and resources to suppliers to help them improve their performance. This can include technical assistance, process improvement workshops, and knowledge sharing sessions.

5. Conduct Co-Performance Reviews: Schedule periodic performance reviews with each supplier to discuss their performance, your own buyer performance in the 360 degree sense, identify areas for improvement, and provide feedback. These reviews can be conducted quarterly, semi-annually, or annually, depending on the nature of the relationship

Examples of Resilience Actions in Action ??

1. **European Utility**: Implemented a digital solution to continuously identify and update risks, which notifies decision-makers when any new risks emerge.

2. **Automotive OEM**: Created a digital twin of its value chain and automated data flows, enabling sensitivity analyses of different sources of volatility.

3. **Specialty Chemicals Manufacturer**: Partnered with top suppliers to improve the total cost of ownership, reduce risk and cultivate innovative value adds.

What These Actions Could Change For You ??

By implementing these actions, you can protect margins, contain cost escalation, and dynamically capture opportunities. You can position your procurement function at the centre of your company's response to the current context.

It's time to rethink procurement. The actions you take today will define your success in 2023 and beyond.

Happy strategising!

Tim