Unlock the Potential of Procurement in the Digital Age

Procurement in the Face of Challenges

The last two years have presented unprecedented challenges for procurement. Many clients have experienced difficulties like never before. Dominique Lebigot emphasizes that procurement has a history of reinventing itself every ten years, and this current period is no exception. It's about being aware of the future and preparing accordingly.

CPOs must focus on how procurement can impact the business and drive growth. The next generation of procurement is about bridging the gap between the downstream and upstream markets, capturing growth opportunities at 360 degrees.

Reorganizing the Procurement Organization

In terms of organization, the future of procurement may not see a radical shift. However, the perception of procurement within a company will change. It will be seen as an enabler for growth, influencing various aspects such as innovation and the circular economy.

Buyers of the future will spend less time on transactional tasks like managing tenders and negotiating prices. Instead, they will focus on managing supplier ecosystems, developing business acumen, and driving revenue generation.

The Role of AI in Procurement

Artificial intelligence is set to play a significant role in procurement. It will help limit transactions, allowing buyers to dedicate more time to strategic influencing. ChatGPT-like technologies will facilitate the development of supplier ecosystems and anticipate market volatility.

While digitization brings new opportunities, it also poses challenges. Buyers need to adapt to the changing landscape and embrace new tools and processes.

Measuring Procurement Impact

Measuring procurement impact goes beyond just creating margins. It includes factors such as share price improvement and CSR. Procurement has a huge impact on building the company's image and generating revenues through supplier relationships.

In the context of volatility, procurement can play a proactive role in managing and even creating value. By influencing the markets, buyers can better control volatility and open new doors for the company.

The Circular Economy and Procurement

The circular economy is no longer an option but a necessity. Procurement must organize the circular economy to reduce the carbon footprint and generate profit. This involves rethinking production, selling services instead of products, and recycling.

Buyers of the future will need to engage with customers in discussions about bringing used products back into the production system. It's a collaborative effort that requires leadership skills.

Procurement as a Board-Level Topic

Procurement needs to become a leader and change manager across the company. Instead of waiting for recognition from executive management, procurement should take the lead and drive changes through its own leadership.

CPOs should work on multiple priorities simultaneously, depending on the company's environment and culture. Each piece of the puzzle contributes to the overall transformation of procurement.

As we look to the future, it's clear that procurement is at a critical juncture. The next decade holds great potential, and it's time to embrace the (r)evolution and shape the future of procurement.

Unraveling the Drought Crisis Facing Ohio Farmers

Drought Conditions and Their Severity

Representative Don Jones, R-Freeport, who represents some of the highly impacted areas, has been actively involved. He is co-sponsoring a measure to assist farmers. The drought has led to skyrocketing hay prices, with people paying as much as $80 a bale and sometimes even more if they can find it. Many farmers have been forced to sell off their livestock due to a lack of feed. This situation has put a strain on their livelihoods and forced them to make difficult decisions.

Ohio's U.S. Drought Monitor map as of Nov. 19, 2024, clearly shows the extent of the drought. Richard Tinker from NOAA/NWS/NCEP/CPC has been closely monitoring the situation. The drought has not only affected crop yields but has also led to depleted groundwater, forcing farmers to rely on trucking in water to sustain their operations.

Stakeholder Perspectives

"Yes, you can get paid for hauling hay if it's more than 25 miles," he said. "Yes, you can get paid for hauling water and get reimbursed for that water you purchase, but there are a lot of gaps in between, and it's not fully reimbursed." He added that federal programs, which serve farmers across the entire country, don't have the same understanding of local needs and dynamics.

The first cutting of hay was a bit dry but manageable. By the second cutting, yields were down significantly, and a third cutting was almost non-existent. This meant that many farmers had to start using their hay stores earlier than usual to carry their livestock through the winter. "We would normally start feeding hay in mid-November," she said. "Now we have been feeding hay since mid-June. Normally, for those needing to buy round bales, you would pay about $40 to $45 per round bale. It's now close to $80 to $85."

Lawmakers' Questions and Concerns

Jones stressed that "we don't know where this ends," and he didn't want to ask for too much now and risk lawmakers being reluctant later when the need might be greater. Representative Dani Isaacsohn, D-Cincinnati, cautious not to mention climate change directly, asked if an ad hoc approach is the best way to address the problem. He said, "This is not the last time this is going to happen. Unfortunately, this is going to get worse. It's going to get more frequent."

He asked Baldridge if the department is thinking about a climate mitigation fund or some state-level version of crop insurance and what approaches other states are considering. "Because right now, it's these farmers who are acutely impacted," he said. "In the future, it will either be other farmers or, honestly, if it goes the other direction, it will be basements in places in Cincinnati that people can't afford to fix, right?"

Representative Bob Peterson, R-Washington Court House, warned against "irrational exuberance" and attempting to recreate crop insurance when the federal program is "very robust." He said, "The one gap probably that exists right now in federal crop insurance is these haying grazing operations. And I appreciate the work that the administration and you have done to try and address that gap that's out there, but I don't see the need to step into what the federal government does very well."

Despite the quibbles on the margins, lawmakers on the panel had no reservations about advancing the funding. The measure was introduced and reported favorably in the same hearing. It still needs approval from the full House and the Senate, but given its rapid progress and broad support, it seems likely to be a priority in the final weeks of the legislative session.