Reducing Supply Risk Tops this Year’s Annual List, as Sustainability makes a Big Jump

Consulting firm The Hackett Group is out as usual with its assessment and recommendations for the procurement function in 2022.

Supply Chain Digest Says...   Agility, Hackett says, is about more than being flexible and change-ready; it also includes the ability to anticipate, predict and rapidly react to shifts in the external marketplace. What do you say? Click here to send us your comments   Click here to see reader feedback

This week, SCDigest looks at what The Hackett Group calls the top 10 priorities for procurement in 2022. Next week, we will summarize the rest of the report.

Those 10 priorities are:

Number 1: Reduce Supply Risk to Ensure Supply Continuity: Enhancing business resilience and minimizing the impact of supply disruption to protect revenue and profitability was the top priority for the first time in Hackett’s annual Key Issues Study.

Number 2: Reduce Spend Cost: Reducing the cost of supplier spend remains of course a core priority, though Hackett says the focus has shifted to mitigating the cost effects of the current inflationary environment, whether through supplier relationships, contract terms or even hedging.

Number 3: Act as a Strategic Advisor to the Business: Procurement organizations continue to view becoming a strategic advisor to the business as a key enabler to achieving performance goals and delivering on an expanding list of enterprise and functional objectives.

Number 4: Enable Corporate Sustainability: Hackett says that the expectations and demands of procurement’s stakeholders, including employees, customers, and governments, around supplier sustainability have elevated this priority more than any other on procurement’s agenda – from number 8 in 2021 to number. 4 in 2022.

Number 5: Accelerate Procurement’s Digital Transformation: Hackett says that “Digital transformation has become an essential enabler of procurement organizations’ ability to deliver new services amid constrained budgets, with better intelligence and increased speed, customer-centricity, and competitive advantage.” Hackett has been on a digitization theme for procurement for several years now.

Number 6: Improve Analytical, Modeling and Reporting Capabilities: Hackett writes that procurement now recognizes that success increasingly requires a data and insight-driven approach to value identification. It notes that “A critical enabler is making ever-expanding sources of reliable, up-to-date and forward- looking data and intelligence available to end users.” For 2022, this will require specific focus on modeling and projecting the impact of inflation.

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Number 7: Align Skills and Talent with Changing Business Needs: The modern vision of procurement requires strengthening skills and competencies, Hackett says, whether to improve stakeholder engagement, meet raised business expectations, or develop new capabilities in areas like sustainability, supply risk, and data intelligence. Hackett says in 2022 a specific focus is needed on employee retention in procurement.

Number 8: Modernize Procurement Application Platforms: Like all areas of the supply chain, procurement continues its shift from on-premises legacy systems to Cloud-based software suites, while filling functionality gaps in the suite and/or substituting some suite modules with Cloud-based point solutions.

Number 9: Improve Procurement Agility: Agility, Hackett says, is about more than being flexible and change-ready; it also includes the ability to anticipate, predict and rapidly react to shifts in the external marketplace. In this incredibly dynamic environment, agility has never been more crucial – even if its measurement remains somewhat elusive.

Number 10: Improve Stakeholder-Centricity: Hackett says survey respondents understand that being a modern, strategic, business-enabling function requires a focus on the needs and expectations of stakeholders (e.g., customer, internal business, supplier), as well as procurement itself. The procurement function’s operating model must be designed through the lens of these groups.

So there is Hackett’s top 10 procurement priorities for 2022. How do they compare to your list?

We’ll be back with our review of the rest of the Hackett 2022 report next week.

What do you think of the Hackett's procurement priority list? Let us know your thoughts at the Feedback section below.