From TCM (traditional cost management) to SCM (strategic cost management)?

🔝 Can we please move Procurement from TCM (traditional cost management) to SCM (strategic cost management)?

Here’s what I’m talking about:

I’ve observed that we often focus heavily on analyzing past data in our procurement processes, rather than adopting a more proactive & future-oriented approach.

This is partly due to the limited availability of procurement tools that provide predictive data.

However, I believe we now have a greater awareness of this issue & can implement simple processes to shift our perspective and manage this transition more effectively.
Hence my proposition to prepare for the change.

So what are TCM & SCM ?

1️⃣ TCM methods offers valuable insights into HISTORICAL spending, it can often fall short in providing a good strategic guidance that we need to optimize procurement processes & gain in competitivity.

2️⃣ SCM, on the other hand, adopts a PROACTIVE & forward-looking approach, aligning our cost management with overall business objectives & leveraging a broader range of data & analytical techniques.

How to implement (refer to the table for practice):

1. Data Collection & Analysis
2. Total cost of ownership (TCO) analysis
3. Identify & Prioritize cost drivers
4. Develop cost reduction strategies
5. Implement performance measurement
6. Continuous improvement, always…
7. Change management, of course!
8. Invest in technology (We can start this transition with Excel, but for large data, a spend management tool is better, while we are talking AI, I’m still seeing many procurement org. stuck with Excel to analyse data, so please, let’s do the investment ?)

What we need to be taken into account for our implementation?

✅ Strong leadership support: secure buy-in from senior management to ensure adequate resources & support for SCM initiatives.

✅ Cross-functional collaboration: a strong collaboration between procurement, finance, operations, & other relevant departments.

✅ Change management: effectively manage the change process to ensure smooth adoption of new processes & technologies.

✅ & Continuous learning: encourage continuous learning & development within the procurement team to skill up their knowledge.

Moving from TCM to SCM is a journey, not a destination. Continuous improvement & adaptation are key to realizing the full benefits of a strategic approach in our function.

Let’s explore how to make this transition a reality 👇 ? How can we improve the below proposition?