Digitization a Key Thread throughout the Six Focus Areas

Two weeks ago, SCDigest published part 1 of our review of the 2022 “Keys Issues for Procurement” from the consultants at The Hackett Group.

That included a summary of Hackett’s 10 procurement priorities for this year. (See The Hackett Group on the Top 10 Procurement Priorities for 2022.)

Supply Chain Digest Says...   "Reflecting a developing role and shifting priorities, procurement teams continue to expand the need for new roles and scarce skills," Hackett says. What do you say? Click here to send us your comments   Click here to see reader feedback

As promised then, this week SCDigest takes a look what Hackett calls a list of six areas for procurement organizations to focus on in 2022.

They are:

Double down on digital transformation: Hackett says the pandemic kicked procurement digital transformation into a higher gear. Now the priority must be to sustain that momentum and invest wisely by conducting a rigorous analysis of value of different options.

“It will be important to work with technology function business partners and design intentional information architecture, as well as to carefully manage expectations around tool implementation timelines, speed to value, and return on investment,” Hackett says.

Produce better insight: Insight is key to driving many of the top 10 procurement priorities, Hackett says. That includes reducing supply risk and spend cost, acting as a strategic business advisor, and increasing agility.

Hackett adds that “Procurement executives need to focus on moving beyond the multitude of pilot and small-scale applications of data and analytic technologies to more mainstream applications.”

However, companies must remember that better insight doesn’t happen through technology alone – it also require effort to increase data and analytics acumen among procurement staff.

Improve supply chain visibility: Hackett says that mapping or obtaining up-to-date insight into the development of the supply chain is a critical activity, needed to address many of the key issues faced by procurement. Hackett adds that “This is a fundamental step to progress in third-party risk management, supplier diversity and carbon emissions reduction initiatives.”

Modernize and virtualize the procurement operating model: Hackett notes that the shift to hybrid work practices has repercussions beyond enabling remote working - It offers the opportunity to redesign work and completely decouple execution from the physical location. Hackett adds that "procurement should take this opportunity to optimize use of centers of excellence and virtual global business services organizations.”

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Mitigate the impact of structural talent shortages: "Reflecting a developing role and shifting priorities, procurement teams continue to expand the need for new roles and scarce skills," Hackett says. What’s more, "the evolving global phenomenon of higher turnover, upward pressure on wages, and an intensifying war for talent will only exacerbate current talent constraints," Hackett adds.

Hackett also note that “Procurement organizations will need both offensive (acquisition) and defensive (talent retention and development) strategies that are thoughtfully conceived and effective,” while ensuring diversity and inclusion are built into team processes.

Provide leadership for the enterprise sustainability agenda: Hackett notes that corporate social responsibility (CSR) continues to climb the ranks of priorities at many companies.

“This is one of the areas where procurement can make the biggest impact,” Hackett says, by preparing for the longer-term business impacts resulting from climate change and diversity commitments. After setting goals, procurement should “build those objectives into the measurement of the procurement function, team members and supplier performance, and look for ways to take stakeholders along on the journey.”

Looking beyond the unprecedented instability of 2020 and 2021, "procurement organizations will need a transformation agenda for 2022 that reflects the lessons learned and strategic reorientation following the crisis, as well as emerging new disruptors and opportunities,” Hackett concludes, adding that “Through all the turmoil, procurement leaders must remain laser-focused on developing resilience within the supply base, adding value to the enterprise and delivering real performance improvements”

What do you think of the Hackett's procurement focus list for 2022? Let us know your thoughts at the Feedback section below.