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Procurement Strategy

Jan 02
premikati sap ariba procurement

Mastering Procurement in 2024: A Quarter-by-Quarter Strategic Roadmap for Success

By Procurement No Comments

An effective procurement strategy is more than just a way to cut costs; it’s a crucial driver of value and innovation.

As we step into a new year, let’s explore a comprehensive, quarter-by-quarter strategic roadmap that procurement professionals can leverage to elevate their operations, align with organizational goals, and stay ahead in an ever-changing market.

 

Q1: January – March: Foundation and Planning

  1. Assessment and Goal Setting (January)
    • Perform a granular analysis of last year’s procurement data, focusing on spending patterns, supplier performance, and compliance issues.
    • Collaborate with key departments to understand their procurement needs and challenges.
    • Set Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals that may include cost savings, process efficiency, and supplier diversity.
  2. Strategy Development (February)
    • Develop strategies tailored to different categories of procurement, considering both direct and indirect spending.
    • Incorporate risk management strategies, focusing on supply chain resilience and adaptability.
    • Plan for the integration of advanced tools like SAP Ariba, focusing on how they can enhance procurement operations.
  3. Implementation Planning (March)
    • Create detailed project plans, identifying milestones and key deliverables.
    • Develop training programs and materials for the procurement team and other involved stakeholders.
    • Establish a communication plan to keep all stakeholders informed and engaged throughout the implementation process.

Q2: April – June: Implementation and Optimization

  1. Process Implementation (April)
    • Start with a pilot program to test new processes in a controlled environment.
    • Establish feedback mechanisms to gather insights and make necessary adjustments.
    • Ensure compliance with both internal policies and external regulatory requirements.
  2. Supplier Relationship Management (May)
    • Develop a supplier segmentation strategy to identify key suppliers and manage them accordingly.
    • Initiate regular business reviews with key suppliers to discuss performance, opportunities, and challenges.
    • Look for opportunities to consolidate suppliers and negotiate better terms or bulk discounts.
  3. Performance Tracking and Optimization (June)
    • Utilize dashboards and reporting tools within SAP Ariba for real-time monitoring.
    • Conduct quarterly reviews to assess progress against goals and make adjustments as needed.
    • Foster a culture of continuous improvement, encouraging team members to suggest and implement enhancements.

Q3: July – September: Expansion and Innovation

  1. Market Analysis and Expansion (July)
    • Conduct thorough research to identify emerging trends and new market opportunities.
    • Evaluate the potential risks and benefits of expanding into new markets or product categories.
    • Plan for the integration of new suppliers, ensuring they meet the organization’s quality and compliance standards.
  2. Innovation in Procurement (August)
    • Explore emerging technologies such as IoT, robotics, and AI, assessing their potential impact on procurement processes.
    • Encourage the team to participate in industry workshops and seminars to stay abreast of the latest trends.
    • Pilot innovative procurement practices on a small scale before wider implementation.
  3. Strategic Sourcing Initiatives (September)
    • Reassess sourcing strategies to ensure they align with current market conditions and business objectives.
    • Develop partnerships with suppliers to foster innovation and improve supply chain sustainability.
    • Implement category management to optimize the procurement of goods and services across different categories.

Q4: October – December: Review and Future Planning

  1. Performance Review (October)
    • Analyze key performance indicators in detail, comparing them against industry benchmarks and historical data.
    • Solicit feedback from internal customers and suppliers to gain a 360-degree view of procurement performance.
    • Identify key learnings and areas of improvement to inform future strategies.
  2. Budget Planning and Forecasting (November)
    • Collaborate with finance and other departments to align procurement budgeting with overall business objectives.
    • Use predictive analytics to forecast future spending trends and procurement needs.
    • Plan for contingencies, ensuring flexibility in the face of market changes or unexpected challenges.
  3. Setting Goals for the Next Year (December)
    • Develop goals that not only focus on cost savings but also on value creation, sustainability, and innovation.
    • Plan for technology upgrades or implementations in the coming year.
    • Align procurement goals with the broader strategic objectives of the organization.

Comprehensive Checklist of Action Items:

  • Perform detailed procurement data analysis.
  • Set SMART procurement goals.
  • Develop category-specific strategies.
  • Plan and implement advanced procurement tools.
  • Conduct pilot programs for new processes.
  • Establish strong supplier relationships and management strategies.
  • Utilize SAP Ariba™ for performance tracking.
  • Engage in continuous process optimization.
  • Conduct market analysis for expansion.
  • Pilot innovative procurement practices.
  • Implement strategic sourcing and category management.
  • Conduct detailed performance reviews.
  • Align procurement budgeting with business objectives.
  • Set goals for technology upgrades and innovation.
  • Foster a culture of continuous improvement and learning.

 

By following this detailed roadmap and checklist, procurement teams can ensure a strategic, efficient, and value-driven approach throughout the year, ultimately contributing to the overall success and growth of the organization.

Nov 14
procurement blueprint

Your Procurement Blueprint

By Procurement No Comments

Embarking on the Journey of Strategic Procurement: Crafting Your Blueprint for Success

 

In the grand scheme of business operations, procurement often takes a backseat in the limelight, yet it remains a cornerstone of a company’s strategic foundation. This pivotal process, if navigated with foresight and finesse, can propel a business to new heights of efficiency and financial prowess.

The question then arises: What does your Procurement Blueprint look like, and how does it integrate within the larger vision of your enterprise?

Understanding the Essence of a Procurement Blueprint

Procurement, when envisioned as a blueprint, suggests a strategic, systematic approach akin to an architect’s detailed plan for a building.

It’s a comprehensive design that details every beam and bolt of the procurement function — from process mapping to technology integration. This blueprint is the silent sentinel of your supply chain, ensuring every aspect is meticulously orchestrated and aligned with your business’s heartbeat.

The Architectural Parallel: Procurement and Building Design

Just as an architect meticulously plans each aspect of a building’s construction, a procurement blueprint outlines each stage of the procurement cycle with precision. We’re talking about a step-by-step guide, from supplier selection and contract negotiation to purchase order management and performance evaluation.

Each phase is pivotal, akin to the foundational layers of a high-rise. Take supplier selection — it’s not merely about who can give you the best price, but who aligns with your quality standards, ethical practices, and delivery schedules.

Contract negotiation is about crafting agreements that are flexible yet robust, ensuring they weather market fluctuations and unforeseen events. Purchase order management is the logistics ballet, where timing is everything, and performance evaluation is the retrospective analysis that sharpens your blueprint for future builds.

Incorporating Best Practices and Technology

A procurement blueprint is not static; it’s a living document that evolves with best practices and technological advancements. Leveraging technology, such as SAP Ariba™, is like choosing the right materials for construction — it can make or break the efficiency and resilience of your procurement operations.

SAP Ariba, for instance, streamlines procurement by providing end-to-end automated solutions, reducing manual errors, and saving time. It allows for better supplier management, contract compliance, and spend analysis, turning data into actionable insights. By integrating such technology, your blueprint is not just a plan; it’s a high-powered engine driving your procurement process.

Tailoring to Fit: The Customization of Your Blueprint

No two companies are the same, and neither should their procurement blueprints be. Your blueprint should be a tailored suit, fitting the contours of your company’s needs and strategy. It’s about understanding your company’s unique market position, internal processes, and long-term goals.

Customization means scrutinizing the supply chain to identify areas for cost savings, efficiency improvements, and risk mitigation. It’s also about aligning procurement objectives with overall business goals, whether that’s market expansion, sustainability, or innovation.

The Foundation: Building a Strong Procurement Framework

At its core, a procurement blueprint lays the groundwork for a robust procurement operation. It builds a strong foundation that supports the weight of supply chain optimization and delivers tangible value through cost savings and efficiency.

A well-structured blueprint not only guides current operations but also equips your company to adapt to changes in the market, technology, and regulatory environments. It’s a tool that helps manage risks and seize opportunities, ensuring procurement is an enabler of growth, not a bottleneck.

The Outcome: Value Creation and Strategic Advantage

The true worth of a procurement blueprint lies in the value it creates for the company. It’s not just about cutting costs; it’s about investing in relationships, quality, and innovation. It’s about strategic sourcing that aligns with company values and goals, creating a competitive advantage.

A robust procurement strategy can lead to improved supplier relationships, where partners are engaged in a collaborative, win-win relationship. It can streamline operations, reduce cycle times, and enhance the company’s ability to respond to market demands.

Your Blueprint, Your Legacy

Just as a building’s blueprint is critical to its structural integrity and functionality, so too is a procurement blueprint to a company’s operational and financial health. A well-crafted procurement blueprint is not just a reflection of your company’s current practices; it’s a roadmap to where you want to go and the legacy you wish to build.

As we delve into the intricacies of creating such a blueprint, we must ask ourselves: Are we merely laying bricks and mortar, or are we sculpting the future skyline of our business? The answer lies in the strength of your procurement blueprint — your strategic masterplan for procurement excellence.

Sep 12
5 Frustrations Procurement Professionals Will Understand

Five Frustrations Procurement Professionals Will Understand

By Procurement No Comments

Every profession comes with its frustrations, but procurement comes with its own very specific set. If you’ve been in the business for more than a minute, you’ve probably wanted to put your head through your desk on more than one occasion thanks to these special procurement nightmares.

Are You Ghosting Us?

We’ve all had it happen—after weeks of back and forth, we message a supplier an important question that will impact, well, everything else. And we wait. And wait. Days pass. Weeks. Centuries… Okay, maybe that’s a bit dramatic, but when we are relying on this one piece of feedback in particular, it can certainly feel this way. If you don’t have the answer to our question, let us know. It’s okay. Just please, please don’t put us through the special hell of ignoring us completely while we search for a solution or an answer.

How Big Are Your Shoes?

Did you promise us the moon? Well, buddy, you’ve got big shoes to fill. Unfortunately, lots of other departments (cough, cough suppliers, marketers, we’re looking at you) have their toes in their arch supports. It’s frustrating when the people we rely on to fulfill our job duties overpromise and underdeliver. It leaves us backed up and with a whole lot of explaining to do.

T Minus 10 Minutes

We get it—sometimes genius strikes at the midnight hour (and often when we are furthest away from pad and paper), but changing plans mega late in the game is really difficult in procurement. If we’ve spent months planning for everything you need to execute your brilliant plan, changing everything last minute makes us shudder. Oftentimes, it simply cannot be done on timescale that suits everyone, and we’re the ones who end up taking the flak. Give us plans and give us time and we will give you the world, though.

The Ol’ Switcheroo

We’re planners. Have we mentioned that enough? We like plans. More importantly, we like sticking to plans. So, marketers and sales folks, believe us when we say that we are looking for this one particular item, especially if we say that’s all we’re looking for. Extra especially if we’ve already said it once. Give it up on the upsell and the cross-promotion, and we’ll thank you for it. Respect our already limited time and we’ll pay it back in spades with loyalty and not-too-many emails. At least the former, as long as you keep your prices reasonable and your delivery on time.

Dripping in Gold

Speaking of upsells, do we look like we’re made of money? We can’t break the bank on every new request, every outlandish marketing idea, every new and ingenius product idea. We have to save for a rainy day and prioritize our cash flow toward the best and most efficient option. You can stop calling us names—we’re not literally always looking for the cheapest option, even if it seems that way sometimes. We’re not trying to make your life harder. We’re trying to make our dollars take us as far as we can and sometimes that means saying things like, “No, I get that it’s a more ergonomic option, but we cannot approve another (sigh) standing desk at this time.”

Did this list make you want to cry into your keyboard? You can find relief at the Premikati Marketplace where procurement is easy (and way less frustrating).

Sep 12
Best Practices to Open the Silo Between Accounts Payable and Procurement

3 Best Practices to Open the Silo Between Accounts Payable and Procurement

By Procurement No Comments

Summary: Accounts payable and procurement work hand in hand, although many departments remain uninformed about the goals, metrics, decisions, and communications of the other. Businesses can breach data silos among the two departments by implementing Intelligent Spend Management solutions, utilizing technology and automation to its fullest, generating shared goals among the two departments, and generating a culture of effective sharing and communication. Creating flow between AP and procurement reduces risk, opens usable capital, increases business agility, and supports better supplier relationship management.

Why Is Alignment Between AP And Procurement Important?

Accounts payable and procurement can be seen like the left and right hands of an organization. Unfortunately, in many businesses, neither hand knows what the other is doing—even if they both report to the same person—which results in unnecessary fumbling, inefficiency, and lost profits. In an ideal scenario, finance, procurement, and supply chain all need to work closely together, sharing data and common goals for the greater good.

Procurement and accounts payable are an obvious place to begin when breaking down information silos because procurement is tasked with buying goods and services while accounts payable is responsible for paying for those same goods and services. Procurement and payment need to be combined under one reasonable, cohesive procure-to-pay (P2P) strategy in order for both “hands” to bring the best value to an organization.

A cohesive P2P strategy offers the following benefits to businesses:

  • Positive working capital and achievable early payment discounts generated through realistic timelines between both departments
  • Sourcing that involves more depth and insight than procurement can achieve on its own
  • Better spend analytics based on data for more accurate cash flow predictions
  • Better supplier relationship management via sharing and communicating goals, updates, and information about interactions
  • Contract negotiation with suppliers that offers greater flexibility

Intelligent Spend Management: A Strong Plus

Intelligent Spend Management enables businesses to manage every source of spending across every category while aggregating spend data under a single, unified view.

SAP Ariba, the basis for our Premikati Marketplace, is a strong proponent and deliverer of Intelligent Spend Management solutions. Focus and agility are byproducts of “[understanding and using] data, transforming it from information into intelligence, and intelligence into value.” Intelligent Spend Management allows businesses to mitigate risks, collaborate effectively, automate their source-to-pay processes, and engage in rapid acceleration—toward fast-changing customer desires and new business models and revenue streams alike.

As it applies to AP and procurement, Intelligent Spend Management helps teams communicate and prioritize better, uncover hidden spend, and collaborate more effectively with suppliers and business partners.

Actionable Ways to Open the Silo Between Accounts Payable and Procurement

In order for a business to begin the process of integrating accounts payable and procurement in such a way to mitigate risks and unneeded spending, it must begin with a plan. The following are starting points for businesses to create a path toward open, effective procedures between AP and procurement:

Agree on Common Goals

It doesn’t how hard either side is working if they are each working toward conflicting goals. Both departments should agree on common metrics and goals that both work toward throughout the month and subsequently report to relevant executives. Cash flow goals should be shared and purchasing decisions made in accordance with these goals. One shared goal which can be acted upon immediately is to create and utilize a combined, up-to-date vendor master list that is devoid of duplicates and is clear about who maintains what responsibilities in regards to the list.

Use Technology To Its Fullest

Technology is the cornerstone of adaptable, agile businesses in the modern day. Not only can technology help mitigate risk through automated processes which reduce errors and fraud, it can also be a key factor in breaking down communication barriers between departments which previously maintained their own separate records and metrics. If both AP and procurement maintain data through technological means, then that data can be more effectively combined and utilized to make better business decisions and predictions.

One immediate way to opt in to technology to support effective processes between procurement and accounts payable is via adopting and Intelligent Spend Management system. Because data will be able to be viewed from a centralized dashboard, insights and intelligence quickly follow. Having this form of system in place can also guide other processes between departments such as which key metrics to prioritize.

Other disruptive technologies may also be of use during AP / procurement crossovers. SAP Ariba, basis of the Premikati Marketplace, utilizes the high-tech trifecta of AI, machine learning, and blockchain. These sorts of technologies can assist with safe record-keeping, automation, and predictive analytics.

Create A Culture of Sharing

Information hoarding is an ineffective approach in today’s business culture. Instead, opt for a sharing culture that understands boundaries—sharing at length, but efficiently.  In conjunction with creating shared goals, each department should also share information related to their key metrics and goals, their progress, and offer solutions surrounding how the two departments can work together for overall success.

AP and procurement should share relevant information regarding invoices—such as unpaid, late invoices—and recent interactions with suppliers. Similarly, any vendor info which has changed should be made promptly available to employees in both departments, perhaps through the combined vendor list. In terms of efficiency, an action businesses can take right away is to set aside a time for sharing and questions between the two departments. If questions can be saved for the end of the workday, then constant interruptions are less likely to throw off the flow of each side’s work, yet needed questions can be answered to better inform decision-making and priorities, offering fast adaptability on a day-to-day scale.

An Intelligent Spend Management system is one way to combine effective, efficient sharing culture with technology for easily-accessible data for all.

Feel free to share your best practices or pain points below…we love to hear comments from those in the field!

Sep 12
Top 6 Ways to Engage Sustainable Sourcing for SMBs

Top 6 Ways to Engage Sustainable Sourcing for SMBs

By Procurement No Comments

Summary: Sustainable sourcing has become a consumer and investor expectation which impacts businesses not only morally and ethically, but alters customer loyalty, price point, risk level, and more. Because SMBs make up the vast majority of global businesses, the combined global impact of ethical choices can alter the course of history as long as businesses take steps toward responsible procurement environmentally, socially, and economically.

Sustainable sourcing is at the forefront of planning efforts for many businesses as climate change and consumer expectations offer a clearer and clearer call to action. As SAP Ariba Live and the coordinating Sustainability Summitfast approach, businesses of all sizes prepare to learn how to further augment and optimize their approach to sustainability in the supply chain.

There are benefits to businesses outside of morality and ethics as it pertains to responsible procurement and sustainable sourcing.

On the financial front, sustainable product sales have risen nearly 20% since 2014 and sustainable fast-moving consumer goods (FMCG) have a CAGR of 3.5%, almost four times that of conventional products. Another point for the bottom line—Millennials and Gen Z are more inclined to buy sustainable and ethical products devoid of harmful chemicals and which support social responsibility, with 73% and 72% respectively willing to pay additional costs for products that meet these requirements, according to Nielsen. Additional customer loyalty and increased prices can make a major difference to an SMB’s growth. And it’s not just consumers who expect transparency and sustainability—investors are increasingly on the lookout for responsible practices within the companies they choose to support.

Government initiatives are another reason to pursue sustainable sourcing, because many places around the globe offer incentives for responsible action. Similarly, avoidance of legal trouble and hefty fines is a byproduct of ethical decision-making in the procurement process. Because many unsavory practices hide in complex supply chains, opting for transparent sourcing platforms can help SMBs avoid unexpected compliance issues.

SAP Ariba, through their Procure With a Purpose campaign, supports the full list of UN Sustainable Development Goals (SDGs) which include basic rights and expectations such as access to clean water and food, elimination of poverty, gender equality, education, and responsible consumption and production. In order to achieve these goals and many others along similar lines, SAP Ariba focuses on three pillars of sustainability: social, economic, and environmental—all of which can guide the process for SMBs who seek to practice sustainable sourcing.

Society

Social sustainability refers to human and workplace rights, while social ethicality often refers to supplier diversity and similar measures. According to the speaker at the 2019 Sustainability Summit, Givewith CEO Paul Polizzotto:

“Society is demanding businesses change the way they operate by acting more sustainably and with greater transparency – all while generating a positive impact on the world. There’s an incredible opportunity for procurement teams to amplify their organization’s impact, not only by prioritizing ethical suppliers butby sourcing from suppliers who add social impact sales incentives into these transactions to drive even greater change.”

  1. Transparency, not slavery

With more than 40 million slaves worldwide, it is important to expect transparency from all members of a supply chain, all the way to the original source. Transparency is the enemy of unsavory practices such as slave labor and is an important first step in any sustainable supply chain. SMBs can require risk assessments and reports on working conditions, even through trusted third parties, in order to reduce the chance that slave labor is part of any step in the creation of their products.

  1. Engage diversity

By working with historically underutilized businesses (HUBs) and minority-owned businesses, SMBs are able to opt for ethical business decisions that help the world economy as a whole.

Economy

Approximately 50% of the world’s population lives on less than $2 per day. By supporting sustainable practices in businesses who pay workers a living wage, SMBs can impact poverty worldwide.

  1. Support economic growth in underserved communities

By choosing procurement processes which support indigenous workers and other underserved communities, wealth is spread and business grows symbiotically in tandem with one another. Single origin products can help ensure fair exchange of funds for exports from indigenous regions, but this is only one method to engage this practice.

  1. Verify risk levels for fair labor practices

Because poverty is an issue that spans the globe, SMBs can use a risk management platform to help ensure they do not support forced labor or child labor and to verify that all workers receive a decent, sustainable, living wage for the time they put in—and that the hours expected of them are similarly sane. The Ariba Network and platforms built upon it such as the Premikati Marketplaceintegrate supplier risk management software to avoid pitfalls such as this.

Environment

We often hear of large enterprises which take on environmental issues. For example, L’Oreal and McDonalds have opted to nix deforestation from their commodity supply chains. Similarly, Danone—maker of Evian water—has been developing a new, more sustainable and recyclable makeup for plastic bottles to help eliminate the pollution crisis. However, SMBs can have a substantial impact on the environment by simply choosing to work only with sustainable suppliers.

  1. Cut out toxins

Choose suppliers who elect not to use toxic and ozone-depleting substances in order to reduce pollution as well as hazards to workers and even consumers. As demand wanes, suppliers will be forced to change their processes—and those who were ethical and responsible from the outset are rewarded.

  1. Say “no” to waste

In a world overrun by pollution on land and at sea, sustainability as it pertains to wasteis a must. Ways SMBs can apply this to their own sustainable procurement process include choosing suppliers who:

  • Limit unnecessary packaging materials
  • Create recyclable products
  • Utilize recycled products in the creation of their own products
  • Create reusable products
  • Offer products which can be repaired rather than thrown away
  • Use environmentally-friendly, renewable materials in production such as bamboo

Considering SMBs with less than 500 employees account for 99.7%of employers in the US, the power held by businesses of this size is formidable. By functioning in unison, SMBs have immense sway over the state of both business and the world we live in. It is through this majority power share that GPO platforms such as ourPremikati Marketplace—powered by SAP Ariba—offer a truly actionable opportunity for SMBs to engage sustainable sourcing practices and become stewards of our future, all the while saving time and money.

Sep 12
intelligent spend management

What is Intelligent Spend Management?

By Procurement No Comments

Intelligent Spend Management: Why it Exists, and Why you Need it

Between global sourcing initiatives, product lifecycle management, supplier diversity milestones and more, the procurement operation in any sizable company is tasked with processing immense volumes of data.

And with the immense popularity of lean and tech-oriented skill sets in the discipline, no data is more relevant to procurement than the things that impacts company spend.

The Problem: Data Islands

Often, supply chain data is kept on systems that don’t talk with each other. Some systems may be deprecated, while others exist only on certain peoples’ machines.

In operations like this, the company is said to lack something called business intelligence– the ability to efficiently analyze data with technology and derive actionable information.

Introducing business intelligence to a company typically involves change management processes with long time horizons, affecting the bottom line. The growing pains required to become a business intelligence-enabled company may require a major culture shift, too, even while dropping large amounts of money on new ERP systems and consultants.

For those procurement operations that do have all their data efficiently accessible in one place, they’ve still only ach

  1. Procurement Strategy

ieved half the battle. Approaching the data with informatics, or the science of how to use data, poses another challenge altogether.

Intelligent Spend Management: How it Works

Thankfully, for small and medium-sized procurement operations, it doesn’t take a reverse auction guru, enterprise software wiz, and sourcing strategist all in one to enhance the unit’s business intelligence with technology. The traditional methods of enhancing business intelligence have been tailored for procurement professionals in a new, simplified process called Intelligent Spend Management.

First and foremost, Intelligent Spend Management (ISM) streamlines your software suite into a centralized hub. From there, ISM allows the supply chain professional to anticipate threats, understand their market, and work across business units to deliver efficiencies that were virtually impossible before.

SAP Ariba, the most comprehensive ISM software suite, generates more data from across the source-to-pay cycle than any other network. As the company website notes, “SAP Ariba’s vast repository of data has been aggregated from millions of companies conducting trillions of dollars in spend over the course of more than 20 years.”

Thanks to the flexibility of SAP Ariba, third-party solutions and custom flexibility can be easily integrated into the software. Efficiency-oriented solutions like Premikati Marketplace fit squarely into the suite without disruption to the end user.

Intelligent Spend Management: Starting the Conversation

With any change management process, the business needs executive buy-in for the initiative to be truly successful. Achieving that buy-in can be a challenge to procurement professionals, who may face pushback for introducing disruptive, new ideas.

Thanks to the presence of consulting companies specializing in the process, like Premikati, the conversations over how best to introduce ISM to one’s own business can take place in a guided, easy-to-understand manner.

Intelligent spend management is as much a philosophical approach to the procurement operation as it is a function of corporate business intelligence. Reach out to the folks at Premikati, who offer an SAP Qualified Partner-Packaged Solution, to start the intelligent spend conversation.

Sep 12
supplier diversity

Supplier Diversity: How it Improves Business, and How it Works

By Procurement No Comments

Supplier Diversity: How it Improves Business, and How it Works

Diverse spend is an ongoing goal for companies large and small alike. For government contractors and their subcontractors along the supply chain, the goal of supplier diversity can even stand as a requirement to doing business.

Exacerbating the search for diverse spend, suppliers often don’t even realize their potential to benefit from formal recognition of their diverse supplier qualities.

Supplier diversity can therefore feel like an onerous goal at times, imposed on supply chain professionals and business owners who already face manifold compliance requirements and boxes to check elsewhere.

Fortunately, in almost any industry, supplier diversity initiatives can be successful on both the buy and the supply sides with an all-encompassing approach that utilizes business intelligence, researches outside knowledge, and takes proactive measures. (You’ve already made a good first step coming to this page!)

The benefits of supplier diversity

Most large companies have been striving to increase supplier diversity for decades. But just what is a diverse supplier?

In the case of supplier diversity where the U.S. government is concerned, the OFCCP – Office of Federal Contract Compliance Programs – provides the following major small business subcontractor categories:

  • Disadvantaged
  • Woman-owned
  • Veteran-owned
  • Service-disabled veteran-owned
  • HUBZone (Small Business Administration-designated “Historically Underutilized Business Zones”)

With the U.S. federal government requiring those contracting in excess of $700,000 ($1.5 million in construction) on a deal to pursue subcontract according to certain percentages with the above small business categories, it becomes crucial for these businesses to know their supplier bases inside and out.

There are other categories outside of or overlapping with the above, too, such as foreign businesses and National Institute for the Blind (NIB) or National Institute of Speech and Hearing (NISH) affiliate businesses.

Supplier diversity’s benefits are not limited to satisfying government contracting requirements. Having achieved supplier diversity – either as a buyer, or as an entrepreneur who has attained diverse certification (more on that below) – one’s business becomes more attractive to outside companies looking to improve diverse spend overall.

Moreover, from a marketing perspective, the potentially unique approaches of diverse suppliers can bolster a company’s ability to navigate the U.S.’s increasingly diverse demographics.

Identifying diverse suppliers

For many corporations, supplier diversity is nothing new. To illustrate, CVM Solutions found in a 2017 report that 75% of supplier diversity programs have been in place for more than 3 years. In the same survey, however, only 25% of supplier diversity professionals rated their programs as “very effective,” signaling a gap between those who knowwhat supplier diversity is and those who achieveit.

Of acute relevance to small and medium-size companies is to know how to demonstrate supplier diversity. Luckily, doing so is a relatively simple affair thanks to the existence of Supplier Diversity Certification.

Major national-level certifying agencies include the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC), and the U.S. Department of Transportation DBE Program, and the SBA Woman-Owned Small Business (WOSB) Program. Other major certifications exist, with even the state of Ohio operating its own Disadvantaged Business Enterprise (DBE) certification program.

Knowing about certifications is only half the battle. Suppliers may not realize the business benefits of certification, and their customers may not think to ask. Procurement supplier business surveys should always ask in plain terms about suppliers’ knowledge of diverse supplier certification beforeestablishing whether they have any! This simple question can save lots of time, money, and calories for all parties involved.

For small and medium businesses especially, the art of sourcing diverse spend can still seem excessively time-consuming, cost-intensive, or just overwhelming to approach. Easy-to-use tools exist to streamline this process.

Integrating diverse suppliers

Dun & Bradstreet (DNB) is meanwhile known for its deep supplier sourcing database, and assigning a D-U-N-S identification number is free for all businesses required to register with the U.S. Federal government for contracts or grants.

New networks and databases are cropping up to meet the unique demands supply chain professionals face, like in supplier diversity. Premikati Marketplace, an SAP Partner-Packaged Solution, enables diverse supplier sourcing with ease.

SAP Ariba is a major software suite that supply chain professionals use to drive all sorts of business decisions.  Using SAP Ariba in a turnkey, in-browser navigation system, Premikati Marketplace connects suppliers (including diverse) with buyers. It is free for suppliers to set up, with no costs or fees to maintain.

With Premikati as a WBENC-certified woman-owned business, enhancing users’ supplier diversity connections is a key function of its Marketplace. New suppliers have the opportunity to connect with potential buyers, and potential buyers to new suppliers, thanks to the low barrier to entry design of the network.

From electronic requisition processing to supplier information queries, Premikati’s Marketplace solution is easily tailored to diverse supplier integration.

Every supply chain initiative poses unique opportunities and challenges, and supplier diversity efforts are no exception. For a more personal touch to your unique supply chain initiatives, contact Premikati’s experts for a real human’s ideas and insights on how you can improve supplier diversity and enhance other efficiencies in your company’s supply chain now.

About PREMIKATI

Founded in 2009, Premikati, Inc. is a WBENC certified woman-owned Supply Chain Business Process Outsourcing (BPO) firm, providing cost savings and financial, contractual and supplier risk mitigation services to purchasing organizations for mid and large enterprises while leveraging best-in-class purchasing processes and technology. Premikati has partnered with SAP and is one of only five companies globally to have been granted the most exclusive partnership level with SAP Ariba, as a BPO Partner.

Sep 12
Ariba Snap procurement implementation

Procurement with a Purpose – SNAP! Implementation

By Procurement No Comments

Marisol Buchanan, CEO of Premikati, Inc., had the pleasure to speak in NYC at SAP Ariba’s Business with a Purpose Summit – along with Step Up for Students (SUFS) COO, Anne White.  The challenges faced by SUFS and and solutions of implementing SAP Ariba’s Guided Buying and SNAP! tools are highlighted below.

The Problem

At a high level, Premikati had been tasked with giving parents and guardians access to their children’s scholarship funds AND providing easy access to the things they are allowed to buy including tuition, provider services and school supplies.

If we asked to partner on this project a few years ago it would have been very difficult from a change management perspective and we would not have recommended Ariba due to the complexity and all of the massive capabilities of the software, which is a good thing for large corporations but rather confusing for a basic consumer who may not even know what the word “Procurement” or “advance ship notice means”.

The Solution

Now, through the innovations made by SAP Ariba to the user interface and adding Guided Buying, along with the simplicity of SAP Ariba SNAP!, the implementation end user training has been drastically simplified.

This is imperative considering the landscape of the situation:

We have:

  • 100,000 families
  • not using corporate devices with standard operating systems
  • limited access to email
  • low user experience with business support technology like WebEx for training
  • multiple languages
  • many families with multiple children
  • 2000 schools which now are “Suppliers” who have limited experience with “e-Invoicing”

With this said, Premikati, Inc. has developed a robust and creative Change Management Strategy.  In addition to standard business communication vehicles, we are leveraging social platforms such as text messaging, YouTube, Facebook and twitter to engage and interact with these families in a way that easy and common for them.

So, essentially, we are taking complex procurement technology and best in class business processes and applying them in a way to make a positive impact on families, because that is what really matters.  That is truly procurement with purpose.

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