Digital transformation behind in procurement
- Digital transformation had a high impact in achieving enterprise objectives, enhancing performance and optimizing the service delivery model for 30-40% of procurement organizations, according to research by the Hackett group in the "2019 CPO Agenda: Building Next-Generation Capabilities."
- Procurement organizations are expanding their focus on strategic sourcing and spend management in response to economic uncertainty, increased competition and global trade issues, the report found.
- Procurement divisions expect budgets to grow at a slower rate in 2019 (1.3%) than 2018 (2.7%) with staffing growth also dropping from 2.8% to 0.9%, the study found. With revenue growth expected to increase, productivity and efficiency gaps will be created and must be overcome.
The rise of analytics has affected every link of the supply chain, but some came late to the party, including procurement. And even with gains in analytics and digital transformation the discipline still is lagging in other areas.
Procurement professionals also must dedicate themselves to becoming more customer-centric and agile while investing in the right talent to help lead change. Digital tools are wonderful, but without the right people in place, much of what they can do will go unused.
Co-authors Chris Sawchuk, principal and global procurement advisory practice leader, and Laura Gibbons, research director, wrote that while the focus on improving analytics is encouraging, “there is still a mismatch between what procurement considers to be most critical for success and what it is able to address.”
The study pointed to five key areas for procurement teams to develop:
- Improve analytical capabilities with an emphasis on elements that can be monitored in real time like spend analysis.
- Align skills and talent with business needs, with a focus on analytics and data modeling.
- Leverage supplier relationship management (SRM) with an eye toward collaborative communication beyond simple product design.
- Improve agility through faster decision-making enabled by efficient technologies and qualified staff.
- Prioritize customer needs.
The study is based on information gathered from about 150 global procurement executives at companies with annual revenue of $1 billion or more.
- The Hackett Group 2019 CPO Agenda: Building Next-Generation Capabilities
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