Himanshu Singh Raghuvanshi is the Co-Founder and COO of Capgrid Solutions, an end-to-end Source-to-Deliver company for the low complexity direct material spend focused on the Automotive and EV industry. His corporate responsibilities are best invested in directing the operations within the company and fostering a feasible financial plan for phased growth. Broadly, he oversees the core verticals of operations and sales to ultimately create a pathway for profits and expansion.
The COVID-19 outbreak has placed massive pressure on global supply networks, at times halting production and closing airports and seaports, thus preventing the transfer of raw materials and finished commodities. At the outset of the pandemic, procurement functions turned to crisis management mode to assist companies in mitigating interruptions, such as finding personal protective equipment for personnel and assisting smaller suppliers with cash flow management. For procurement to thrive in a country as enormous as India, businesses would need to rethink not only the function it performs but also how it operates and what new capabilities it will require.
Technology in the procurement process
With the rise of e-commerce and the arrival of the internet in India, the procurement process has become primarily conducted via electronic means, such as email and online marketplaces. Procurement was also revolutionized as an outcome of technological breakthroughs, with the advent of e-indexes and fully automated web-based end-to-end procurement systems controlled by enterprise resource planning software (ERP). Such solutions let customers place orders through any mobile device or digital system with internet access.
The tangible advantages of the tech funnel in procurement
Utilizing digital procurement technology enables you to structure your spending among providers and track everything centrally. This not only allows you to utilize volume to lower costs, but spend analytics also makes it easier to consistently identify cost reduction opportunities. In addition, you will be better equipped to manage risk management, contract compliance, track your suppliers, and utilize supplier scorecards, all of which contribute to increased productivity and savings. Reporting on requisitions, purchases, orders, and invoice payments is facilitated by a centralized database containing all transactions. You can readily determine which departments within your organization are ordering and receiving the most goods, whether they are adhering to spending limitations, etc.
Is the Indian procurement industry making a shift?
While there has been a lot of tech driven innovation in the B2C procurement space, the B2B space only has ERPs and a few tech solutions for procurement of consumables. The Indian manufacturing industry is looking for tech to optimize their procurement. Right from traceability of their purchase to real time data to insights generation, the procurement industry is at a tipping point. Everyone is trying to find innovative solutions to optimize their procurement.
The changing contours of procurement
The question that most manufacturers face in these modern times is whether to continue focusing on manufacturing alone or on branding, sales, product launches etc. Consolidation of procurement has always had its merits. Today, reduction of procurement complexity and associated costs are being triggered through rationalization and consolidation of procurement even for their core categories. Even in circumstances where demand or cost do not justify the count of internal resources, consolidation provides the organization with an opportunity to work with companies that take their procurement burden but optimize the inefficiencies through their tech.
Amelioration of the supply chain for better procurement prospects
As supply chains in India grow increasingly transnational and linked, they confront a variety of concerns, such as environmental issues, the emergence of a multipolar economic system, increased geopolitical threats, and the possibility of mass health-care catastrophes. Companies with intricate supply-chain networks, such as the automobile and technology industries, are particularly susceptible.
The time has come to conduct a comprehensive evaluation of supply chain risks and to handle them with more care. Companies may improve transparency by collaborating with suppliers to get information about their upstream suppliers and value chains. In this dynamic age, business continuity planning has taken on a new meaning. Many large firms, particularly those in the rising electric vehicle (EV) and automotive industries, are developing contingency plans for the inaccessibility of whole nations, not just a single supplier factory.
They are responding by consolidating their procurement with reputable and technologically advanced strategic sourcing and procurement businesses. These tech-powered platforms are working constantly to create unerring end-to-end sourcing and procurement channels for advanced and salutary remedies to unreliable supply chain metrics. The solutions proffered are intended to create significant improvements in key supply chain metrics.
To take the lead in the future, procurement departments must modernize their operations and collaboration with internal and external stakeholders. Adopting an agile operating model might facilitate the scaling up or down of procurement activities in response to unforeseen supply issues. Many manufacturers, especially in the big-ticket industries like EVs and automobiles, are drifting towards consolidation. Since manufacturers want to focus on high-complexity direct material spending that is strategic to them and core to the product, while low complexity, direct material spend with a large number of SKUs becomes a procurement and logistics nightmare. As a result, trailblazing end-to-end source-to-deliver companies for low-complexity precision parts are making inroads into becoming the ‘cog in the wheel’ for these behemoth OEMs.