Procurement in 2019 - Source Oneanalytics won’t prove as simple as implementing a new tool....

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The Spend Management experts at Source One, a

Corcentric company, reflect on 2018 and share

their predictions for the year ahead.

Procurement in 2019

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If there was any lingering doubt that

disruption and distress are the new

normal for Supply Chain Managers,

2018 likely quashed it once and for all.

What a year.

An escalating series of tariffs introduced

headache after headache for

manufacturers. Organizations across

the food and beverage industry saw

poor supply chain visibility cause a

number of public health scares.

Businesses and consumers alike gained

new insights into what our changing

climate might mean in the years and

decades ahead.

And that’s not even the half of it.

The close of a year is often a time for

rest and reflection. In the final days of

2018, however, it’s clear that

Procurement would do better to focus

on action and adaptability.

Another year of surprises is just around

the corner, here are some of the issues

Source One expects will dominate its

conversations.

Introduction

PROCUREMENT IN 2019


Procurement Tells a Story

No amount of skills and experience will

help Procurement deliver if it can’t

engage with stakeholders.

That means identifying opportunities to

shake up its messaging and rethink the

way it communicates across the

organization. Last year, we called for the

function to familiarize itself with new

languages.

Understanding the themes and terms

preferred by Marketing, IT, and other

stakeholder groups is a good start.

Turning conversations into action,

however, means functioning less like a

translator and more like a storyteller.

Procurement professionals need to

compose a compelling narrative to

communicate their value and tailor their

message for maximum impact.

Framing the unit as both hero and

mentor, the story should clearly outline

goals and objectives without resorting to

the technical language Procurement

usually prefers.

Told well, Procurement’s story will

resonate.

In time, stakeholders will find it easier to

relate with Procurement and even feel

inspired to co-author a sequel.

Applicants, too, will respond with

enthusiasm and feel inspired to pursue

make your organization a part of their

next chapter

PROCUREMENT IN 2019

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Cutting Through the Hype


PROCUREMENT IN 2019

Predictions around emerging and

evolving Procurement solutions are

nothing new. In fact, it seems like we’ve

been talking about blockchain, robotic

process automation, and the Internet of

Things for decades now.

What was once simply hype is beginning

to solidify into genuine insight and a

world of new possibilities. These old

conversations went in new directions

throughout 2018 and we’ll continue to

see the results throughout the coming

year.

Procurement solutions are more

affordable and more widely understood

than they’ve ever been. What’s more,

truly world-class organizations

continually provide evidence of what

greater automation and digitization

really means.

According to Hackett, businesses are

already reducing their labor costs by as

much as 21% and reducing their

headcounts considerably.1

Tangible results mean the conversations

around new tools need to grow more

tangible as well.

Rather than speculating about who’ll be

replaced and how soon, Procurement

needs to develop strategic action plans

for implementing best-fit solutions and

prepare its team to adapt into new roles.


Hackett also suggests that organizations

of all sizes are generally confident when

it comes to Digital Transformation. A

whopping 95% expect a digital revolution

to overhaul their operations within a

matter of years.2

Data analytics will play a major role in

seeing these changes through and

further evolving Procurement’s value

proposition.

There’s seemingly no limit to the

insights Procurement might gain with

access to more and better data.

Emerging tools promise to make it easier

than ever to draw conclusions in real

time, predict changes in the market, and

ultimately provide for more informed,

impactful decisions across the value

chain.

Realizing the benefits of Big Data

analytics won’t prove as simple as

implementing a new tool. Procurement

faces a significant hurdle when it comes

to talent. Leveraging the power of

advanced analytics will mean designing

new roles – maybe even new teams –

and pursuing talent from unlikely

sources.

This is yet another area where breaking

down siloes could go a long way. By

working together more closely and freely

exchanging human capital, IT and

Procurement can develop plans for

maximizing the impact of their collective

wealth of data.

Data Reigns Supreme


PROCUREMENT IN 2019

5


Procurement Professionals Become Polyglots

Data scientists aren’t the only tech

experts that Procurement desperately

needs.

Authorities on cyber security, too, are in

distressingly short supply within most

organizations. As threats continue to

evolve and supply chains spread farther

across the globe, addressing this talent

gap becomes increasingly crucial.

Cyber Security threats are so numerous

and so advanced that organizations

cannot leave addressing them to IT

alone. Simply put, cyber security is not a

purely technological issue.

Addressing it means working with

suppliers to diagnose weak points and

thoroughly assessing the supply chain to

identify risk factors. Procurement is a

natural fit for these efforts, but it should

also work to develop new more tech-

forward positions to perform most

effectively.

Too often, organizations wait until

they’ve experienced a data breach to

begin building out their cyber security

team.

Like any supply chain initiative, making

Procurement an asset to cybersecurity

means taking a proactive approach to

designing strategies and emphasizing the

importance of adaptability.

Cyber criminals are constantly refining

their tools and methods. Procurement

groups must work doubly hard to on-

board expert resources, educate their

teams, and identify vulnerabilities

wherever they may exist.


Addressing the Cyber Security Skills Gap

PROCUREMENT IN 2019


There’s a paradox at the heart of

Procurement’s approach to talent.

According to Deloitte’s most recent CPO

survey, less than half of Procurement

leaders believe their teams have the

necessary skills. At the same time, 72%

of companies devote less than 2% of

their resources to training. 3

In some cases, old misconceptions about

Procurement’s role and strategic value

are to blame. In others, it’s newer

misconceptions about automation.

Whatever the cause – it’s clear that

Procurement’s people aren’t getting the

support they deserve.

The start of a new year is the perfect

opportunity to change this.

Outdated, classroom-bound training

sessions should give way to dynamic

micro-learning modules that cater to a

new generation.

A new approach to training - one that

provides for an open, ongoing exchange

of ideas will provide both the flexibility

and support that professionals require.

Remember, with automation on the way,

it’s especially important to formalize

your methods for building the skills that

machines cannot replace.

There’s nothing soft about the impact so

-called ‘soft skills’ will have in the

coming years.

Rethinking Training

PROCUREMENT IN 2019

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Like ‘soft skills,’ so-called ‘soft savings’

are often dismissed as inessential. Such

thinking flies in the face of

Procurement’s evolving value

proposition and encourages businesses

to retain their most outdated ideas

about the function.

There’s nothing low-impact about

metrics like cost avoidance. Tracking and

reporting on them is an essential part of

understanding Procurement’s role and

the full extent of its strategic value.

Procurement cannot afford to wait

around for its peers within the

organization to see the bigger picture.

They should take an active role in

defining their methodologies for

tracking performance in common

scenarios. The process improvements

associated with negotiating a new

recurring purchase, for example, might

figure into these discussions. Once

they’ve established these, Procurement

can leverage their storytelling skills to

define for Finance and the Executive

branch how they’ll capture value,

optimize budgets, and boost the bottom

line.

Procurement’s relevant metrics should

also evolve to include those related to

ethics, sustainability, and social

responsibility. Today’s consumers and

young professionals demand that

organizations deliver in these areas.

According to EcoVadis, however, only

14% of North American companies serve

these groups by reporting on them.4

Procurement is well equipped to begin

doing so.

Measuring What Really Matters


PROCUREMENT IN 2019


The last decade has shown time and

again that Procurement can generate a

profit. Hopefully, this decade will see the

function prove that it can provide

businesses with the means to serve a

higher purpose.

Purpose matters.

Ernst & Young has found that 89% of

executives associate a shared sense of

purpose with greater employee

satisfaction, more successful

transformation efforts, and better

customer loyalty.5 It’s especially

important to the generation of young

professionals that’s entered the

workforce over the last several years.

Millennials and members of Generation

Z aren’t naïve, but they’re often

supremely principled and socially

engaged. They expect businesses to

pursue profits while also making a

positive impact on society and placing

an emphasis on responsibility and

sustainability. Studies like Deloitte’s

Millennial Survey suggest they’re also

increasingly skeptical that businesses

will do so.6

Procurement is well positioned to

spearhead purpose-driven initiatives.

Enjoying visibility across the supply chain

and straddling the line between various

business units, it has the power to insist

on higher standards and make lofty

goals into central components of their

organization’s mission.

From Profit to Purpose


PROCUREMENT IN 2019

9


Procurement cannot change what it

can’t see.

For Supply Chain Managers to

distinguish themselves as assets to risk

mitigation and social responsibility, they

need to gain far greater visibility into

their supply chains and communicate

the new insights they gain to both

stakeholders and customers.

In addition to painting a dire picture of

Procurement talent, this year’s CPO

survey found that 65% of organizations

lack visibility past their tier-1 suppliers. 3

This limited perspective leaves

organizations vulnerable to an endless

assortment of disruptions and

complications. An off-shore supplier, for

example, might engage in corrupt

practices or take advantage of child

labor. Without the means to address this

issue head-on, Procurement is left

waiting around to incur fines and

disappoint its organization’s customers.

Visibility isn’t just about navigating

around risk factors.

It’s one of the most valuable tools in

Procurement’s efforts to communicate

its value and ultimately boost its impact.

Without it, Procurement cannot drive

initiatives and it cannot deliver the

results we all know it’s capable of.

Looking Past Tier 1


PROCUREMENT IN 2019


As 2018 draws to a close, practitioners

and consultants alike inch closer to the

start of another decade.

For Procurement, in particular, 2020 is

not just any other year. Thanks to nearly

ten years of speculation and

publications, it has come to represent

something far greater, something both

thrilling and terrifying.

Type ‘Procurement 2020’ into your

search bar and you’ll understand.

For some organizations, the new

decade must look like the light at the

end of the tunnel. These groups are

embroiled in digital transformation and

excited to see their efforts rewarded in

a new, strategic era. Others likely see it

as a deadline that’s getting

uncomfortably close to the present.

Maybe they’ve recently seen an

initiative fall apart or watched a

competitor run circles around their

team. In either case, 2019 represents

the home stretch.

Even if 2020 is a purely arbitrary date, it

has meant a great deal to organizations

across the Supply Management space.

Pursuing a more strategic state and a

more essential role, they’ve provided

for Procurement’s evolution and

rewritten the function’s narrative.

The average Procurement group will

enter 2019 better equipped and better

respected than ever before. The

function isn’t an untouched silo or a

green field of opportunity any more. For

more and more of our clients, it’s a

strategic arm of a high-performing

organization.

For Source One that means continuing

to refine our approach and continuing

to deliver services that go beyond

tactical support and truly elevate the

role of Procurement.

In 2019, let’s move forward together.

Facing Down Procurement 2020

PROCUREMENT IN 2019



About Source One, a Corcentric company Source One is a top provider of spend management

solutions ranging from spend analysis and strategic sourcing

through category management and Procurement

Transformation. Since 1992, Source One has helped industry

leading enterprises optimize their approach to countless

indirect spend categories including MRO, Facilities

Management, IT & Telecom, Professional Services, and

more. Serving as an extension of client resources, Source

One’s category subject matter experts deliver best practices,

market insights, tools that drive greater value out of the

bottom line. To learn more about Source One, a Corcentric

company, visit us online at: www.sourceoneinc.com.

1 Laura Gibbons, Christopher S. Sawchuk, and Srinivasa Rao Dabbera | World Class Defined and Enabled. Raising the World-Class Bar in Procurement Through Digital Transformation | The Hackett Group. Retrieved from https://www.thehackettgroup.com/wp-content/uploads/2018/06/hackett-world-class-pro-1806.pdf

2 Constantine Limberakis and Christopher S. Sawchuk| The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation | The Hackett Group. Retrieved from https://www.thehackettgroup.com/key-issues-pro-1801/

3 Deloitte US | The Deloitte Global Chief Procurement Officer Survey 2018 | Deloitte UK. Retrieved from http://www2.deloitte.com/uk/en/pages/operations/articles/cpo-survey.html

4 Ecovadis| The Fight Against Corruption: Insights Into Ethical Performance in Global Supply Chains | Ecovadis. Retrieved from https://www.ecovadis.com/library/fight-corruption-insights-ethical-performance-global-supply-chains

5 Harvard Business Review | The Business Case for Purpose| Ernst & Young. Retrieved from https:https://www.ey.com/Publication/vwLUAssets/ey-the-business-case-for-purpose/$FILE/ey-the-business-case-for-purpose.pdf

6 Deloitte US| 2018 Deloitte Millennial Survey| Deloitte US. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-2018-millennial-survey-report.pdf

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