With heightened levels of regulation, competition, and risk, procurement departments in the financial services sector, by and large, are more heavily scrutinized and their performance, and that of their suppliers can have a more significant and direct impact on both top-line revenue and bottom-line profitability. In a series of recent interviews with CPOs and other procurement executives in this industry, Ardent Partners identified the following drivers as lynchpins to Best-in-Class performance.
Value Driver #1: Business and Procurement Agility
The heightened levels of competition exacerbated by the unending threat of both new entrants and disruptive technologies, requires procurement teams to stay on the bleeding-edge of market innovation while maintaining an ability to collaborate with line-of-business leaders to adapt supplier strategies as needed and shift investments nimbly. At the same time, the volatile nature of recent political elections has made the regulatory roadmap nearly impossible to predict. Despite this, internal and third-party (supplier) compliance to laws, policies, and regulations has never been more critical. This places procurement and their internal oversight of compliance as well as their external management of supplier compliance and overall performance high on the radar screens of the executive team.
As shown above, being agile is paramount in the financial services industry where enterprises must react swiftly and decisively to dynamic challenges. Procurement agility has become a defining characteristic of top performing procurement teams. Procurement agility may take many forms, but it requires the right technology, the right skills, the right supply management strategy, and internal and external collaboration. The procurement teams that can strike a balance on all of these attributes will be the ones most able to help the enterprise remain competitive in the long-term.
Value Driver #2: Effective and Flexible Solutions
Leveraging the right supply management technology is fundamental to achieving visibility into spend, operations, and compliance and to driving organizational efficiencies and savings. The intense scrutiny placed on risk and compliance in this industry requires procurement organizations to be highly-collaborative with business stakeholders and to be particularly rigorous when it comes to process compliance and particularly strict when it comes to contract compliance.
Deploying the right solutions, and using them well, enables procurement organizations in the Financial Services industry to place a greater emphasis on core processes while also maintaining centralized management over them. For example, more rigorous sourcing and stronger contracts cannot be properly scaled across an enterprise that lacks a strategic sourcing technology system. Likewise, attempts to identify, mitigate, and manage supplier risk as well as supplier performance in a manual manner would be unwise and largely ineffective. Supplier management solutions geared for vendor management and contracts, and designed to manage both vendor and regulatory compliance, are critical as well.
Beyond the core sourcing and procurement processes that can be modeled and managed by a solution suite, there are sizable benefits to utilizing a suite of solutions that can be modified and configured to handle the unique requirements and workflows associated with the Financial Services industry. These benefits include more robust supplier on-boarding features to capture new requirements and credentials, enhanced contract templating and approval flows, and advanced supply risk management capabilities, including both proactive tracking and reactive supply risk event management.
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