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Category: Procurement and Sourcing

Supply Chain News: Hackett Group with Annual Look at Top Procurement Priorities

 

Improving Analytic Capabilities Tops the List, as Budgets Expected to Barely Rise in 2019

 

April 2, 2019
SCDigest Editorial Staff

The Hackett Group is back as usual with its annual look at procurement for the coming year, identifying what Hackett consultants view as the top priorities in procurement for 2019.

Hackett says it developed the list of five priorities by a combination of its key issues survey and the size of the gaps between the stated importance of these procurement capabilities and the ability of procurement organizations to address them.

Supply Chain Digest Says...

Hackett's survey found that procurement budgets are expected to increase this year by just 1.3%, half the amount allocated in 2018.

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The five critical development issues for procurement are:

1. Improve analytical capabilities: As the role of procurement changes, analytics accounts for one of the biggest changes in necessary capabilities. Core activities like spend analysis are moving toward real-time, custom and predictive analytics, while less-mature analytics functions like risk management will join procurement's list of fundamental responsibilities.

2. Align skills and talent with business needs: A rising topic over the last few years, in 2019 procurement must enforce a new talent profile or risk falling behind the curve in critical capabilities. "Must-have" skills include advanced analytics and data modeling, business acumen, relationship management, strategic thinking and risk management expertise.

3. Leverage supplier relationship management (SRM): While SRM has long been a core capability for procurement, it is due for a major shift in approach. Relationships between procurement and its suppliers must become much more strategic, particularly as it relates to collaboration and innovation, not just on product design, but also in the way they communicate and interact.

4. Improve procurement function agility: Agility is an important factor in all areas of business, a direct reflection of the changing market and technology advancements. For procurement, this means faster decision-making enabled by efficient technologies and adaptive staff who possess a variety of skills and competencies.


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5. Improve customer-centricity: Prioritization of customer needs and expectations is now a critical capability for procurement's success. Most importantly, procurement must become a partner for the businesses it supports, making it a priority to develop a deep understanding of business needs. And secondarily, it falls on procurement to make customer processes fast, efficient and easy to understand through means such as self-service, 24/7 support and process automation.

Budgets are Getting Tighter

Despite what at one level seems like the growing importance of procurement, especially in the area of risk management, procurement organizations are going to have to manage with little increase in funding.

Hackett's survey found that procurement budgets are expected to increase this year by just 1.3%, half the amount allocated in 2018.

Interestingly, many procurement-related technologies are have pretty side adoption, as shown in the graphic below from the Hackett report. Even the tools with smallest level of current adoption, spend analytics, is in full or partial place at 57% of companies currently, expected to rise to 92% over the next couple of years. (SCDigest will note projections by companies in terms of expected technology adoption are almost always over-optimistic.

 

Next week, we'll take a look at Hackett's recommend action steps for improving in each of the five critical areas identified.


What would you add to this list of top procurment priorities for 2019? Let us know your thoughts at the Feedback section below.

 

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