How to build a procurement center of excellence

What is a Procurement Center of Excellence?

A procurement center of excellence is defined by its ability to adapt and optimize operations to bring strategic value to the rest of an organization. 

Maverick spending, poor control and visibility of emissions, and time-consuming manual processes are just some of the issues caused by legacy systems that detract from the value of procurement and supply chain operations.

By digitizing back-office procurement management, the CPO can let data lead the way to optimized operations, by getting keen visibility and insight into what’s working and what isn’t. 

By understanding their inefficiencies, and proactively managing and monitoring performance, procurement teams can build a procurement center of excellence that brings insight and value to an organization.

This said, procurement needs digital tools to ensure they can accurately track and report on their data, for compliance, risk management, and continual optimization of best practices and operations.

How to become a procurement center of excellence

It’s impossible to form strategy without the data to back it up. Siloed systems and departmental data as part of a legacy system will inhibit procurement’s ability to understand both its effects on the wider organization and its inefficiencies.

With Cloud-powered digital tools, data can lead procurement operations – here are just some of the benefits of a digitally-enabled procurement center:

• Improved reporting – The ability to report on supply chain performance is crucial to demonstrate value to stakeholders and cement procurement as a strategic arm of the organization. Legacy systems and fragmented data mean reporting is often inaccurate and hampered by arduous and manual data consolidation.
• Spend management – Data-powered spend analytics is the key solution to a lack of visibility around managed and unmanaged spend. Maverick spending can add up for an organization, with yearly purchases of $1 billion, this translates into $10 million in unmanaged maverick spend - control will demonstrate great value to senior leadership.
• Control of emissions - A report from Baker & McKenzie found that 70% of an organization’s carbon emissions come from their supply chain, what are known as Scope 3 Emissions. To reach ESG compliance and sustainability quotas, a lot of responsibility falls on procurement to gain visibility of, and control, carbon emissions.
• Integrated data – Data visibility provides the necessary context for procurement professionals to understand their effects on the wider organizations, from HR to finance. With integrated data, procurement can become partnered with these key functions, rather than siloed, improving collaboration.
• eSourcing – Sourcing and tendering suppliers is a key part of any procurement operation, but this can take time, and requests for information are done manually. With eRFx tools teams can cut cycle times in half, but also record data to form better sourcing strategies for the future.