There is no shortage of predictions from procurement experts and companies. Instead of trying to list them all, I wanted to group them into the three major categories that may simplify your job. Anyone can purchase products and services so procurement, as a department, has the challenge of showing value in every aspect of their existence.
The race for procuring, pun intended, the best talent has been challenging. Most experts would agree that the problem will only increase with the growing impact of globalization, gig-economy practices, changing technology, and more demands on communication. Though I wrote about the talent gap recently, this time it is more about the effects at large.
Technical and functional skills – It should be no secret that the continuous training in technical skills and functional knowledge more than pays for itself. Yet, Deloitte’s 2018 CPO Survey says that 72% of organizations spend less than 2% of their budget on training. This is alarming.
Collaboration – Soft-skills, professional maturity, use of team tools, multi-channel communication methods will all play a role in effective collaboration.
Gig-economy –The need for both cost reduction and expertise will drive the employment of temporary staff. Project-based procurement, consultative engagement, product and service specialization, need for geographic presence, among the many factors will permeate procurement.
Generational change – There is no doubt that the mindset and needs of new generations (like Millennials) will radically transform supply chain organization from process to technology.
Technological advancements have rapidly changed the procurement function in efficiency and effectiveness. Though many companies are still the midst of digital transformation, it is no longer a choice but a necessity. Supply chain executives invest an increasing amount in upgrading their toolset to bring more value to their departments.
Specialized software – There are number of specialty software in the procurement industry that helps companies bring more value to the business. Some might find contract management or inventory control to need augmentation, others employ backend integration. The point here is to optimize the most valuable function with an appropriate tool that enables users and decision makers for generating value.
Digital transformation – Much has been said about this, including our own blog post. The truth is that digitization is not equal to digital transformation. In order to make the selected technology work, organizations must also transform processes, hire or train digitally savvy talent, change their processes, integrate with other system, and utilize their software to its full capability. Only then will we talk about true transformation.
Readiness for future technologies – Many companies are not yet ready for LM, AI, Blockchain, or IoT but leaders must choose a path that can integrate new tools in the near future.
One of the growing concerns of procurement departments is the ability to make sound decisions based on available data. Many companies and procurement leaders move from the concept to supply chain to value chain. Why? For one thing, the function represents a large portion of business success which if improved would offer a significant ROI. While some companies take on large innovation initiatives and transformation projects, others may achieve dramatic value generation with smaller investments. At the end of the day, value is created from data driven decision making.
Clean data – As they say, ‘garbage in garbage out’. Need we say more? You may have to hire an expert to determine the state of your data and analyze the processes that create it. Of course, Eyvo’s system provides built in data integrity.
Visibility – You can’t change or improve what you can’t see. Deloitte reported a poor 65% transparency of supply chain leaders visibility beyond first tier of suppliers. This could be due to software capability, inappropriate information sharing, lack of software utilization, or something else like organizational structure issues. Those who find a way to increase visibility will surely have an advantage to make procurement important and relevant.
Business Intelligence – Procurement leaders enjoy the support of their organizations yet their influence at the C-suite level is still lacking. The same Deloitte survey reported that only a quarter of procurement leaders feel that they have a significant impact on business strategy. BI can help with this by providing trends, forecasts, predictions, gap analysis, and the likes that can be brought to discussions at the strategic level.
Value Creation – Cost reduction and increased efficiency is nothing new but will continue to top the procurement concern charts. However, internal and external collaboration, risk management, expert systems, and innovation are not too far behind. Therefore, BI turned into actionable insight must be on the forefront of every procurement leaders.
What’s your priority?
Making the investment in an appropriate procurement solution can help address many of the talent, technology and value issues. Careful consideration of your priorities takes a deeper look at your arsenal of technologies, human resources, processes, and overall business goals. Once the most pressing needs are identified, a plan will almost always involve technology. If you are ready to discuss your software needs, Eyvo is here to help! We have the expertise and experience to partner with you on the digital transformation journey.