Discover the key procurement trends for hypergrowth companies

When businesses encounter a rapid growth period, it marks a pivotal phase in their history. All business and support functions must then prepare to manage this hypergrowth. Far from being an exception, procurement departments play a decisive role in optimising operational efficiency, while promoting healthy and sustainable growth for their company.

The role of procurement in a hypergrowth context

A company is said to be “in hypergrowth” when its turnover, profit and number of employees experience an exponential growth rate. This generally refers to a growth of over 40% in turnover over three consecutive years. This phenomenon is generally associated with certain sectors, like recently with renewable energies, but also with innovative start-ups that benefit from venture capital funding. The corporate culture also features among the key factors of hypergrowth.

This period of rapid growth often translates to expanding into new markets as well as broadening and diversifying the customer portfolio, but also, and above all, to a certain fragility. Business leaders have to address key challenges in areas like recruitment, cash flow management and governance. The difficulty lies in meeting market needs while securing long-term activity.

From a procurement standpoint, the sharp rise in the turnover of these companies inevitably leads to a significant change in expenses. It is in this context that the procurement function plays a key role in controlling costs and ensuring the profitability of the organisation.

As soon as it enters a hypergrowth phase, it becomes imperative to structure the procurement function with robust procedures, performance indicators and contracts, while managing risks and ensuring compliance. The idea is to strengthen procurement management while retaining the necessary agility to meet the needs of a constantly evolving market. Ultimately, the procurement team becomes a true strategic business partner to the executive board.

Six key procurement trends

To support a hypergrowth company, procurement departments have a whole range of levers to activate, from automating procurement processes to training teams.

Automating procurement processes

Process automation is one of the key strategies in hypergrowth companies. It allows processes to be streamlined, human errors to be reduced and supply cycles to be accelerated to boost business performance.

Companies can start by equipping themselves with an e-procurement and/or e-sourcing solution to digitise and automate the transactional (Procure-to-Pay) and/or supplier sourcing (source-to-contract) processes, respectively. With these tools, teams enhance their efficiency, while improving procurement management.

Optimising costs

In a hypergrowth context, another key procurement trend is to control or even optimise costs. Through a Lean approach, companies should systematically identify and eliminate waste as they grow.

In other words, the aim is to reduce needless activities and costs, whether direct or indirect, as much as possible in order to focus on creating added value for end customers.

Operationally, buyers can aim to rationalise their supplier portfolio, optimise spending, ensure purchases match end user needs, rethink delivery flows, etc. These are all potential sources of savings, supporting the profitable growth of the company.

Collaborating with suppliers

For hypergrowth companies, their relationship with their suppliers needs to evolve from a transactional approach to a long-term strategic partnership. It is through close relationships that partners can grow together, with a “win-win” mindset. Together they co-develop new solutions, stimulate innovation, optimise costs and guarantee stable supply. The idea is to build a climate of trust and value-creating partnership.

To achieve this, executives can, for example, implement a support, recognition or training programme for their suppliers. Supplier Relationship Management (SRM) platforms are also gaining popularity to centralise information and promote transparent collaboration throughout the supply chain.

Adopting disruptive technologies

Hypergrowth companies should rapidly adopt disruptive technologies to remain at the forefront of innovation. They can leverage artificial intelligence (AI) to analyse their procurement data, blockchain to enhance product traceability, or the Internet of Things (IoT) to track stocks and shipments in real time.

These advances offer increased visibility and operational efficiency, opening up new perspectives for companies. Moreover, an Accenture study highlights that leading companies which scaled technological innovation during the health crisis saw their revenue grow five times faster than their peers.

Consider corporate social responsibility

Today, no hypergrowth company can grow without considering its social, societal and environmental impacts. The various stakeholders, be they customers, employees or even investors, are particularly attentive to CSR (Corporate Social Responsibility) commitments.

This concept is now crucial to ensure healthy and durable growth. This is why these companies need to turn to committed partners that are engaged in responsible practices, offering sustainable products.

Training procurement teams

It is also essential to turn the procurement function professional by investing in the continuous training of employees. The procurement team can build skills on basics (supplier relationship management, international procurement, legal risks, etc.) as well as on more specific subjects (artificial intelligence, data analysis, sustainable procurement, circular economy, etc.). It is equally important to support their soft skills (collaboration, communication, stress management, etc.) in order to strengthen team cohesion. This is how buyers will best support the rapid development of their company.

Procurement management is therefore a key success factor for companies experiencing a period of hypergrowth. By integrating the right procurement levers into their strategy, organisations can reduce costs while also strengthening their market position. When well organised, they are also more agile and resilient. This is how they can continue to prosper and excel in a constantly evolving competitive environment.