Procurement’s Future: Are We Ready For It?
Procurement has a great future ahead of it thanks to advancing procurement technology, the growth of AI and a stronger, more strategic footing. But are businesses actually ready to enter this brave new world?
“A whole new world/ A new fantastic point of view/ No one to tell us no/ Or where to go/ Or say we’re only dreaming…”
Yes, the lyrics may have originally been written about freedom and new love, but they could easily apply to Procurement in the coming years.
While the profession will have to stay ‘One Jump Ahead’ to deliver for businesses, organisations who know the true value of Procurement know they won’t find a better ‘Friend Like Me’.
Ok, enough Disney-based wisdom for one article!
All joking aside, Procurement is, indeed, moving into a bright new future on the back of years of hard work, collaboration and changing the profession from a highly transactional ‘Purchasing’ function, to a valued strategic business partner.
The internet abounds with Industry white papers and research showcasing how Procurement will continue to grow. With a bit of time, and a willingness to battle through the jargon, you can read research on everything from how to build a “digital function” and using “data driven insights” to increase decision-making speed and accuracy, to using technology to support “innovation, integration and collaboration” and help turn “complexity into a competitive advantage”.
And yet, for all the buzzwords and jargon, and talk of evolution, how much of this is being actively used at the Procurement coal-face? Are all Procurement functions really ready for the changes to come?
The As Is – Utopia vs. Reality
This isn’t an easy question to answer. For all the discussions around Procurement’s role as a strategic partner, there still appears to be a significant delta between the perception of where Procurement is, and the reality of it.
According to CIPS and Hays’ Procurement Salary Guide 2023, the past 12 months have been positive ones for the profession. In the face of all the global supply chain disruption and sourcing issues, a greater number of businesses see Procurement in a positive light. There is a sense that Procurement’s value is now recognised, in particular by senior managers and directors.
However, look deeper into the statistics and not all is rosy in the garden. At first glance, it can be seen as a positive that 61 percent of respondents believe Procurement is valued in their organisation. However, this means there is still a significant number of organisations where Procurement is not seen as having the same value.
A perceived lack of confidence in Procurement data is also highlighted in recent research between Procurious and Spend HQ, with over three-quarters of respondents stating this as a major issue.
The survey also shows that just under half of respondents believe that stakeholders understand what Procurement can offer, with a similar percentage of organisations where Procurement are involved in projects from the outset.
The CIPS/Hays figures are taken from the UK, but are matched for the most part in other global regions too. Positives can be taken from this certainly, but there is still a long road ahead for the profession in many organisations globally, and work to be done to truly become a strategic partner everywhere.
Procurement in Title, Purchasing in Mindset?
So what, if anything, is holding the profession back? And what can be done to change this?
The reality is that, for many organisations across a number of industries, it’s a case of Procurement in name, but Purchasing in mindset still.
Legacy industries around the world, such as heavy manufacturing, ship building and construction, as well as sectors such as health care and education, are in many ways dominated by a more traditional mindset when it comes to Procurement.
Far removed from the advanced technology solutions and the digitisation of the function, many of these more traditional businesses have little or technology input, teams are small and focused on turning out POs and supplier management is still done by other departments in the business.
While there is appetite in many cases to develop a Procurement function, these mindsets and set ups will take a number of years to break yet.
You will know yourself if you work in an organisation with this mindset, but there are still things you can do to precipitate change. Here’s a small selection to get your started:
- Build Senior Management and C Suite Confidence in Procurement
Provide insights into Procurement at the right level in the organisation to get buy-in. At the same time, showcase your successes, be ready yourself to embrace innovation, and then nurture your relationships to lay the groundwork for change.
- Own Your Decisions
Procurement won’t be taken seriously as a strategic partner until it proves it can take control of the decision-making process, make the decisions, and then own the outcomes, irrespective of potential risks or negative consequences. This in turn will build confidence in Procurement as an autonomous, strategic function.
- Collaborate and Change
Working closely with key stakeholders will aid communication, and encourage them to do the same when it comes to new projects. Make sure your information and data is accurate, and you show the value you are bringing throughout the process.
So, is Procurement ready for the future? The answer is probably yes, but with the understanding that it’s not going to happen for everyone at the same time. But by working through this process, it will happen in time.
