Procurement: Turning obstacles into opportunities

procurement department
January 30th, 2020
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Procurement is changing. The current climate of economic downturn, digital transformation and changing job roles certainly poses significant challenges for procurement departments, but these factors can quite easily be turned into opportunities. In its study "Complexity: Overcoming Obstacles and Seizing Opportunities", Deloitte highlights four main challenges (external complexity, internal complexity, talent complexity and digital complexity) and offers advice on how to use them to your advantage.

Challenge no. 1 for procurement: external complexity

There is no shortage of external risk factors: economic downturn, collaboration with mega-suppliers, trade war, climate change, Brexit… 

To control their impact, Deloitte suggests:

  • Developing emergency strategies and plans to address priority risks.
  • Assessing the structural changes needed in your supply base to reduce exposure to certain risks.
  • Adopting specialist technologies designed to optimise supply and logistical risk management.

Challenge no. 2 for procurement: internal complexity

Internally, it is vital that the procurement department is aligned with other departments in the company to ensure seamless collaboration. However, only 26% of chief procurement officers surveyed described themselves as excellent internal business partners.

In order to strengthen the procurement department's position within the company, you must:

  • Determine the procurement department's current maturity and influence levels to identify the areas where it can add the most value.
  • Coordinate the procurement department's investments and activities to bridge gaps in strategic alignment.
  • Automate operational processes to make time for the procurement department to focus on strategic alignment.

Challenge no. 3 for procurement: talent complexity

Attracting and retaining talent is increasingly challenging for procurement departments. This is supported by the fact that only 46% of CPOs believe their current team is qualified and able to implement the procurement strategy. The department faces a shortage of qualified candidates and a gap between the skills that teams currently have and the skills they now need, not to mention the growing importance of digital technology in the talent management strategy.

To remedy this, procurement departments must:

  • Align investment in talent management as closely as possible with the company's key objectives.
  • Rethink the talent strategy by widening the net when sourcing talent. This could mean anything from training existing teams to partnering with local universities.
  • Consider tapping new specialised marketplaces of self-employed workers for specific tasks and expertise.

Challenge no. 4 for procurement: digital complexity

In recent years, the digital landscape has changed considerably for procurement. As a result, the digital maturity of companies varies considerably, ranging from the improvement/automation of internal processes to contributing to the overall transformation of the value chain.

In the coming years, procurement departments will continue to focus on the essentials: analytics and the renewal of strategic (e.g. sourcing, supplier relationship management) and operational (e-procurement) procurement tools. However, disruptive technologies, specifically predictive analytics and Robotic Process Automation (RPA), will not be forgotten.

To transform the digital revolution into an opportunity, procurement departments should consider:

  • Defining a bold digital vision, but executing it iteratively using a stable foundation. Remember: A good digital strategy must be both effective and feasible!
  • Aligning their digital strategy with that of the company in order to build on the same objectives (efficiency for finance, compliance for legal etc.).
  • Staying up to date with the latest technology, but being disciplined in its execution. It is important not to fall behind the curve, but instead take a proactive and ongoing approach to technology with the support of experienced partners.

Do these sound like familiar challenges for your procurement department? To learn more about the current priorities and issues facing procurement departments, you can find an overview of a study on this topic here.