Share |

Focus: Sourcing/Procurement: Feature Article from Our Sourcing and Procurement Subject Area - See All

From SCDigest's On-Target e-Magazine

- April 7, 2015 -

Supply Chain News: Procurement Organizations Strive to Reach "Trusted Advisor" Status

Big Data and Analytics will Also be Key to Increase Agility, New Hackett Group Study Says

SDigest Editorial Staff

The Hackett Group is back with its annual study on the key priorities for procurement organizations in 2015, based on a recent survey of procurement managers.

The new report was co-authored by Patrick Connaughton, senior research director at Hackett, and Christopher Sawchuk, global procurement advisory practice leader.

SCDigest Says:

Hackett also sees good potential in "big data" and advanced analytics in procurement, and believes that building those capabilities will in fact be key to reaching trusted advisor status.

What Do You Say?

Click Here to Send Us Your Comments

Click Here to See Reader Feedback

First, procurement executives will have a little more to work with in 2015 than they did the year before, with respondents projecting on average procurement operating budget increases of 2.7% in 2015. That's up from just 0.7% in 2014 and -0.4% in 2013, perhaps reflecting that companies are getting a little more confident in the economy.

Interestingly, the top priority for respondents for this year was "elevating the role of procurement to trusted advisor," for which a combined 72% said was either a critical or major goal in 2015. That put it ahead even of "reduce/avoid purchase costs" (69%) and "improve procurement's business agility" (68%).

That result of course begs this question: what does it mean to be a trusted advisor of the business?

Well, thankfully Hackett provides some definition, arguing that the following skills sets are related to the procurement function becoming such a trusted advisor:

• Having an executive presence at the table during planning and budgeting.

• Enabling business execution through forward-looking market insights/intelligence addressing business concerns.

• Being perceived as having a sincere interest in helping stakeholders achieve their business objectives (e.g., alignment with business objectives, supportive of top-line growth and cash management).

• Understanding each stakeholder's business and organization and tailoring procurement's message/approach accordingly.

• Being perceived as a change agent and facilitator

• Having the right set of skills (e.g., program management, communication)

The full procurement priority list for 2015 is shown in the graphic below.

Another interesting chart rates procurement objectives in terms of both importance and the ability of the organization to achieve the goal.

(Sourcing and Procurement Article Continues Below)

CATEGORY SPONSOR: SOFTEON

As can be seen in graphic below, reducing costs of purchased goods is of course a high priority and also a goal respondents indicated they were largely well equipped to achieve. That of course makes sense, as reducing purchase costs perhaps the core mission of a procurement function.

Contrast that with say "enabling innovation," which respondents rated as a medium priority in terms of importance, but rated their organization's ability to make that was quite low, well below the mid-point.

Hackett says that talent management in several forms will also be a top priority in procurement for 2015, finding that projects related to talent make up three of the top five planned transformation activities for the year.

"Training and development will be the subject of major initiatives by a majority of respondents," Hackett says. "An example of development programs is stretch assignments. According to Hackett research, this is the most effective development tool for testing high-potential staff in a low-risk way to see if they have the ability to learn new skills."

Big Data Capabilities will also be Key

Hackett also sees good potential in "big data" and advanced analytics in procurement, and believes that building those capabilities will in fact be key to reaching trusted advisor status.

However, "For procurement organizations, taking advantage of the value of advanced analytics necessitates creating new technology roles, aligning agendas, and elevating the overall level of institutionalized technology knowledge," Hackett notes.

This of course would mean a major organizational and cultural change.

Hackett concludes by observing that such analytics capabilities will also be essential for creating greater agility within procurement organizations.

"To achieve agility, procurement has to develop the tools and skills required to harness data and provide business insights in real time," Hackett says.

Should reaching trusted advisor status be a key goal for procurement organizations? Anything in these survey results surprise you? Let us know your thoughts at the Feedback button (email) or section (web form) below.

Recent Feedback

Procurement is becoming increasingly integral to the success of supply chain operations and is delivering great value in return. In addition to the increase in importance, the way procurement professionals do business is changing. Rather than just trying to cut costs across the board, there is now an emphasis on developing relationships with suppliers to create a mutual benefit and leverage supplier expertise. Often times a supplier will be able to assist with producing data driven solutions because of their expertise in their own fields.

Concerning future procurement hierarchy, I believe that every company needs to integrate a CPO position into their executive level of management. Having the freedom of a C-level position to devote to improving supply chain operations can bring an immense amount of value back into a company. Companies need a CPO to be fully devoted to improvement of supply chain rather than having a VP position under a CFO.

Tom Jackson
Student
UT Austin
Apr, 14 2015