4 Essential Capabilities for Procurement Success in 2020

How can you prepare your procurement team for 2020 and beyond?

Deloitte helped answer this question in a paper about the future of the Procurement profession: Charting the Course: Why Procurement Must Transform Itself by 2020. The report takes a look at the dramatic shift that Deloitte foresees in the coming decade and shares how procurement teams will need to adapt in order to avoid falling behind the competition.

In addition to covering risk elements and the importance of expanding to procurement into other business units (especially Finance), Deloitte covered four essential capabilities that will be vital to procurement teams in 2020. How does your team stack up?

#1 Innovation and Creativity – Leadership will view procurement as more than just a group that sources raw materials, goods and services. Procurement can play a more strategic role by being a group that sources ideas. For many mature procurement teams, this is already a matter of present, not future. Procurement needs to be adaptable in the way they approach sourcing models based on a variety of factors, both internal and external. Teams are leveraging a variety of delivery models that include internal utilization of technology, as well as partial use of GPOs/BPOs to manage more total spend. Further, internal selling to executives on each initiative can become a natural output of the team when procurement activities become an outgrowth of executive interests.

#2 Linkage and Alliance – Deloitte notes that the term “organizational alignment” is probably an overused term to describe procurement transformation goals. Even so, organizational alignment will be an imperative piece of procurement success in 2020 (if alignment isn’t already). Not only aligning, but combining finance and procurement responsibility for organizational metrics, numbers, controls and processes is a key step. Linkage requires not only alignment, but shared objectives and accountability.

#3 Talent – If the objective is for procurement to act as a peer rather than simply in a service role, a high level of talent and diverse skill sets will be essential. Procurement teams need to be adaptable in the way they approach various organizational internal customers (different business units, different categories, etc.). This is in fact today’s reality for many mature organizations. Going a step further, Deloitte argues that by 2020 that these roles will be completely embedded across all major areas of the business as functional subject matter experts. Ideally this allows the design of better value outcomes that are indistinguishable from typical procurement drivers.

#4 Technology and Intelligence – As one might expect, more advanced procurement journeys are more likely to include a range of technologies to help tackle and manage the increased range procurement (and overall business) activity. Managing a more mature procurement function demands a greater range of technologies including demand management, commodity management, inventory management, risk management, etc. The technologies empowering these functions cannot remain silos, but need to converge to maximize impact and visibility across the business management spectrum.

Hopefully you find the report as interesting as I did- you can download the full version here.

In the meantime, what do you think procurement success in 2020 and beyond will look like? Share your comments below or tweet us @iasta.

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