Sourcing Strategies

People, process, & technology: building resiliency with strategic procurement in 2024

Author: Margaret Cunha, Senior Director, Supply Chain Solutions, DigiKey

Throughout 2023, the supply chain continued to experience many of the challenges that have defined the past several pandemic years, including extremely high demand paired with production challenges and high costs.

Through all of this, procurement professionals have been hard at work to ensure that their organisations are able to source the electronic components needed to fuel innovative designs, being tasked with coming up with creative ways to predict needs and adapt to challenges – proving themselves to be resilient in ways they may not have expected.

Strategic procurement can help continue building that resiliency, which comes down to getting the right part at the right time and price – a task that is often easier said than done! Becoming more strategic will likely involve gathering and analysing more data from supplier partners and automating processes to reduce manual time needed to work on tedious tasks to spend more time being strategic.

Companies can practice strategic procurement to build resilience into their supply chains, reducing the amount of manual labor their procurement teams must do, while simultaneously making the job more enjoyable and strategic. Building resilience involves quite a lot of smart thinking, anticipation of needs, quick communication and keeping ahead of the curve, but in the end, it’s a worthwhile endeavor to add value to an organisation.

So how can an organisation build all of this into their procurement processes without overworking their team and creating piles of extra work? For me, strategic procurement ultimately comes down to three main ideas: people, process, and technology.

The procurement job is changing

People are incredibly important in procurement processes – there isn’t a professional in the industry who would tell you that relationships aren’t important in this line of work. Even as talk increasingly turns to automation and artificial intelligence, the importance of human connection remains just as vital to the supply chain as ever before.

To those in the procurement space, it’s clear that the work of procurement has changed significantly, particularly over the past several years. Procurement pros need to know things faster, do more with less, and often must deal with the ramifications of global labour and materials shortages, international conflicts and so much more. Additionally, new import reporting requirements to keep up with – such as NEU and REACH regulations in the US and RoHS and CBAM requirements in Europe – create additional work to track and submit certifications to the appropriate regulators.

In order to be more strategic about this day-to-day work, procurement teams should develop a digital plan, focusing on how to take some of the manual, tedious work out of the picture. While developing this plan, don’t forget to leverage your partners’ resources and relationships to your advantage.

Many supplier partners have digital resources your team can use to ease processes and do your best, most strategic work. High service distributors like DigiKey have importer of record (IOR) status in many countries, which can help ease trade compliance paperwork and processes for your team. DigiKey also has excellent relationships with major logistics providers like UPS, FedEx, DHL and more, and may be able to help elevate issues with customer service representatives if needed.

Communication is key

With a changing procurement job comes necessary changes to processes to accommodate new requirements and tasks. These changing processes often involve increased communication, both internally and externally – and that communication frequently needs to take place extremely quickly.

The supply chain is home to a wealth of data, coming from thousands of different sources. This data can enable the automation of processes that can often take up a great deal of a team’s time. Don’t forget – data can be both quantitative and qualitative! It can be very valuable to find ways to gather qualitative feedback from customers, staff, and partners to improve your processes.

However, as valuable as data can be, it can also be overwhelming; a great place to start is determining which data points you and your team actually need for intelligent decision-making, and then figure out what you need to do with it to make it actionable. Is there a system it should integrate with? Is there a dashboard with metrics that it should plug into? What questions are you trying to answer?

If you’re collecting data for the sake of collecting data, you’re likely to end up with a bunch of noise that distracts from the most essential information. Data means nothing if it doesn’t translate to something you can act on!

Once you’ve got the data in, you’re going to need a way to funnel it through the right processes, teams, and systems. Clean, noise-free source data is essential to becoming more strategic and building resiliency in your processes, as it can help automate processes to occur in the background, freeing up your team to focus their efforts elsewhere.

Eliminate the noise, becoming nimble

By finding ways to streamline the collection and analysis of data, procurement professionals can instead focus more of their time on strategic work that furthers the company’s key objectives and goals.

In my opinion, the best place to start with technology is to identify your company’s biggest pain points when it comes to procurement activities. Perhaps it is order tracking and visibility, or maybe it’s regarding the quoting and ordering process itself. In fact, price and availability quoting is where we frequently recommend procurement teams start when it comes to technology and automating processes.

The quoting process often involves a lot of discovery and research, which in turn takes a great deal of time. Most procurement professionals I know would much prefer to gather quoting data all in one place rather than searching from website to website, copying and pasting information into a spreadsheet for comparables! This is a process that computers handle very well, so it’s a great place for companies to consider automating.

As one of the world’s largest distributors of electronic components and automation products, DigiKey provides a variety of digital tools and technologies that help procurement professionals automate their processes, including APIs, EDI, punch-outs and more.

Looking ahead

Looking ahead to 2024, we are seeing positive economic indicators that component lead times may start to come down, and supply will increase later in the year. I believe this is due, at least in part, to the popularity of electrification. It appears that electrification is more than just a hot topic – it’s currently a major driving force in the electronic components space as more companies and consumers shift from other power sources and need components for their electric-powered designs.

We all have learned some hard lessons as a result of these last few challenging years, and procurement teams are eager to safeguard against potential supply chain disruptions in the years ahead.

This article originally appeared in the February issue of Procurement Pro.