New research by the Hackett Group shows that digital procurement transformation is having a major impact on enterprise objectives, improving performance and enhancing the service delivery model for 30-40% of procurement organisations. The study, ‘2019 CPO Agenda: Building Next Generation Capabilities’, gathered the views of 150 global procurement executives in companies with annual revenues of $1 billion or above. It found that procurement teams in these firms are widening their focus on strategic sourcing and spend analytics-driven cost reduction in response to continuing economic uncertainty, global trade volatility, and increased competition.
Despite the rising challenges, procurement execs expect that their budgets will grow more slowly in 2019, rising by 1.3% in comparison with last year’s average of 2.8%. Staffing growth is also expected to decline, decreasing from 2018’s 2.8% to 0.9% this year. The research shows how analytics has affected every link of the supply chain but also finds that the discipline, though benefitting significantly from digital procurement transformation, is still lagging in other respects.
Procurement pros have a ‘catch up’ challenge ahead, dedicating themselves to enhancing their customer-centric approach while improving their analytical capabilities. This requires investing in the right, tech-savvy talent who can get the best, not only out of spend analytics but also a range of other digitalisation innovations. While digital tools can deliver impressive results, much of their potential will remain unused without the right people in place. As well as improving skills in real-time monitoring of spend analytics, the study found that procurement teams will also need to align their skills with business, focussing especially on data modelling and analytics.
Furthermore, they will need to improve supply relationship management by means of collaborative communication with suppliers, going beyond basic product design, and harness efficient technologies, and the talents of properly qualified staff, to improve their efficiency with swifter decision-making. Finally, they will need to place a high priority on meeting and managing customer needs.