The procurement function has changed and will continue to change in years to come. Now more strategic, better aligned with commercial value and in tune with business risks, the modern procurement function is about so much more than cost management.
But along with this transformation of the value of procurement comes a need for changes in how the broader business sees the procurement function. It is critical that senior leaders recognise the true business and organisational impact of procurement and the role procurement plays in the business’ competitive advantage and long-term survival. As part of this, the business must communicate the value of effective procurement to all other departments and business functions.
As procurement becomes more and more strategic, the strategic use of technology becomes more and more important. In fact, use of technology is a key metric used by benchmarking firms to measure the maturity of procurement organisations.
Here are a few trends that are reshaping the future of procurement:
Introducing electronic procurement systems: E-procurement is making the entire procurement process faster, easier, more integrated and accurate. With standardised workflows, getting the correct level of approval and seamlessly accessing existing supplier information; pulling up existing tasks and preventing out-of-contract purchases is simplified.
Simplifying analytics: For most procurement professionals, “big data” isn’t something to smile about. That is until they could use automated procurement solutions, with customisable spend analytics capabilities, to make data-driven decisions and improve business processes. And as innovations like machine learning and artificial intelligence (AI) mature, procurement solutions will only get smarter.
The dawn of supply chain 2.0: Want to test your supply chain? See how things hold up in the event of a natural disaster. When these incidents occur, big businesses find themselves plotting what they should be doing to protect their supply chain from risk. One of the options is to embrace more streamlined supply chain processes – like centralising buying and consolidating vendors – which leads to greater operational efficiency.
Changing perceptions about procurement: Typically, the stereotypes for procurement professionals see them being described as “pencil-pushers” and “number-crunchers”. But as we mentioned above, this is changing as the global economy focuses less on cost savings and more on strategic advantage. This is especially true as we see more and more cross-organisation collaboration, which sees the procurement team using a range of technologies to work closely with all departments across the business.
Addressing the skills shortage: As the roles and responsibilities of the procurement function evolve, the talent landscape needs to evolve too. But according to a recent DHL Research Brief, there is actually a talent shortage where “demand for supply chain professionals exceeds supply by a ratio of six to one”. The reason for the shortage is high demand and a lack of candidates fit to take on these changing job requirements. This shortage makes it imperative to free up the procurement team’s time using technologies that automate routine administrative work and enable them to do more with less.
The main function of procurement hasn’t changed – it involves coming up with strategies to get the best price for good and services in an effort to reduce costs. How we value this work, however has totally transformed. To read more about similar changes happening across all industries as a result of technological innovation, you can visit our blog. Or simply sign up for our newsletter and all the latest happenings in the business space will be delivered to you every month. Complete the form below to subscribe.