Bridging the Gap Between Procurement and Operations
It isn’t uncommon for many companies today to treat their procurement team and operations team as independent entities. At face value, this procurement-operations divide seems to be the most efficient way to handle two distinct processes. However, separating the two workflows often leads to competing initiatives and does more harm to an organization than good.
This is further exacerbated by disruptive events such as wars, pandemics, trade barriers, and varying customer expectations that put more strain on an already fragile supply chain landscape.
These circumstances have led companies to recognize the importance of bridging the gap between procurement and operations management to facilitate a more efficient and streamlined system.
New tools can elevate strategies
Increase visibility to minimize downtime
If you can’t measure it, you can’t manage it.
The first step you should take in closing the gap between procurement and operations is increasing the visibility of your MRO strategy.
When your procurement and operations processes are in two distinct lanes, chances are that the data is fragmented across multiple departments, eventually leading to data silos. Not only will data be buried in outdated, manual, and slow systems but they’re more likely to be inaccurate, dated, and unreliable.
Harmonizing data across your entire MRO strategy unifies procurement and operations activities under a single platform, which helps you achieve true visibility. This can help shed light on what’s working and what isn’t so that you can make corrective actions to mitigate any issues.
For instance, you can leverage the power of artificial intelligence and machine learning to analyze previous occurrences of production downtime. This helps gain insight into recurring problems, preventing future catastrophes before they happen whether it’s in the form of preventative maintenance or stocking parts that are historically delayed.
Take the guesswork out of procurement
Today’s global supply chain moves extremely fast and is everchanging.
Even if an organization is able to meet overall demand, factors like seasonal demand, the introduction of competitive products, promotional activity, and certain disruptive events can lead to big fluctuations that lead to serious setbacks.
If an organization isn’t flexible enough to adapt to these changes, then this can cause serious bottlenecks in the procurement and operations strategy. An organization, therefore, should construct a resilient system that can be responsive to fluctuating circumstances.
Businesses can harness the power of predictive analysis to create accurate models that capture the subtleties of the real world. Managers can then use this to make accurate predictions instead of resorting to estimated guesswork. Using this newfound insight, managers can then make informed business decisions. This helps eliminate the risk of unplanned downtime without the need to spend on additional parts that may not be needed.
This rang especially true in the time of COVID restrictions which shut down numerous offshore manufacturing plants. It led to delayed shipments from key suppliers and businesses were left scrambling. A smart system, however, could have helped allocate parts across organizations to move existing inventories where they were needed most or recommend purchasing from alternate vendors.
These smart systems use dynamic algorithms to make the best decisions for the present moment. It’s an effortless way to bolster your strategy in response to global changes.
Consolidation leads to collaboration
The problem with using separate strategies for procurement and operations management is that it robs an organization of the chance it has for active collaboration.
Having two separate infrastructures means that managers will likely be looking at different data sets—or at least the same data through different lenses.
This can lead to inefficiencies that have a ripple effect across the entire system. For starters, since there is no timely exchange of information or prompt communication between these two disparate management systems, an organization will not be able to respond quickly to disruptions. If a business has more fires burning than it can put out, then this can seriously threaten its survival.
A cloud-based solution can help consolidate all your data into a single AI and machine learning platform which can facilitate consistent action items through both systems at once. Since stakeholders have access to the same information at any given time, they can enjoy the luxury of reliable reporting across all sites.
What’s more, managerial teams will also be able to track where money is lost on rogue spending. Coupled with powerful algorithms, you’ll be able to yield valuable insight regarding effective ways to eliminate such inefficiencies.
Streamlining your strategy can be simple
Today, it no longer makes sense to keep treating procurement and supply chain management as independent units. A cross-functional collaborative strategy will not only help your organization boost efficiency but will also help you stay ahead of a competitive, volatile, global market.
Certainly, transitioning to a merged system is no easy task. Aligning your procurement and operations objectives is hard enough, especially when it comes to knowing where to start.
Turning to traditional consulting approaches doesn’t cut it anymore, especially if the solutions they offer are static, one-size-fits-all solutions that are optimized as they are implemented. AI, on the other hand, optimizes on top of what exists so operations continue to improve as changes are implemented.
Investing in a purpose-built solution that evolves with your organization is the best way to bridge the gap between procurement and operations departments.