Nuts and Bolts: IT as procurement Chyawanprash!

MUMBAI, INDIA: It's hard to resist asking this to Somit Mukherjee, Senior General Manager - Purchase, Dabur India Limited when we met him at the SAP Cloud Connect event. "Does Chwanprash have an expiry date at all?" Among other interesting myth-breakers, Mukherjee tells the beauty and powers of aging that rare things like a bottle of this dark concoction or that of a wine are blessed with. As he smilingly indulges some sillier and not so silly questions, we can't help guess that perhaps a smart procurement strategy at his company is way past the expiry fear labels. This is why.

Why is IT something that the Procurement and Purchasing department of any organization would care about?

IT today encompasses the entire organization and as to the purchasing function, it is playing a big strategic role. The cost side of many organizations is driven heavily by purchasing and that's where penny spent can make a lot of difference to the bottom-line. Purchasing has to innovate quite a lot in cutting-edge organizations like ours. When your vendor base is spread across the country, you need IT to accelerate and enable interactions in cost-effective manner and in a less complex way. The commodity market today is akin to an ECG graph and fluctuates widely and that's where IT comes in too.

But do both functions work in tandem or do you keep having interesting arguments?

IT is an empowering force and we respect that a lot, specially its role in improving communication across the depth and breadth we operate in. Sometimes we initiate ideas and models too. IT brought in a new level of transparency and analysis which helps us in being agile with procurement strategy. We can segregate data patterns and decide well on a bid by separating routine information from top-eye concerns. Many market trends are brought together on this platform for faster analysis and with that, strategy becomes more outcome-based and sharp on bottom line. Cost factor is very crucial in a high-inflationary economy like India.

Does that caramelize into any other differentiators beyond cost, for a competitive market like yours?

Field knowledge and instant reactions give us a better grip as market realities are relayed to us. If there is a monsoon sense being felt by a farmer in Tamil Nadu, it may not make newspaper headlines but it matters to our business. Knowledge is an intangible but has huge power. Strategy changes at our end also have implications for marketing and supply chain management (SCM). Dynamic exchange of pricing and real-time information connects all these functions like procurement, marketing or SCM.

After the SAP footprint in place in procurement space, what next is on the cards?

We are going to increase e-procurement to payments which is an advanced concept. As documents become more complex, IT can enable and simplify so much and it helps a lot when a vendor expects a single window treatment. The service part of procurement in the pre and post stages is also crucial.

Does the last mile infrastructure constraint pose an issue in this purchase chain?

Our main items in the chain are usually agricultural commodities. When we started new approaches in 2004 many vendors did not even know how to use computers but gradually it has fortified as strength, so much so that now they ask us what next we are bringing in the sourcing landscape.

Do you feel convinced by SAP's new emphasis on Cloud?

It is a good movement and Cloud adoption in India is entering a new stage. If tangible benefits can be seen, the pace will only increase. It may depend on a case-to-case basis but Cloud can have greater effects on service sector.