Procurement in 2020: Don’t Scuttle the Ship Just Yet!

One of the themes that emerges throughout Deloitte’s paper, Charting the course: Why procurement must transform itself by 2020, is the importance of, to put it bluntly, not completely blowing up the procurement function to create a new one to deal with a mind-boggling set of newly emerging responsibilities and issues. In Deloitte’s words, we shouldn’t “scuttle the ship just yet”:

For a new procurement function to thrive in 2020, a
 near revolution will likely have to occur. Many of today’s fundamentals will stand in the decades to come: category sourcing, baseline procurement systems, human resources management, purchasing performance, and knowledge management. But the purchasing organization of 2020 will need more.

Procurement will likely need a new operating approach to optimize localization (i.e., regional enablement) and global support. Decisions around centralization and execution may vary between organizations, but the need to define functional and organizational structure will always remain as part of overall processes, category sourcing, leadership, and execution roles — just as it is today. Such a structure not only enables procurement to support internal customers (and their needs) at more defined and localized levels, but also to enable insight and action to adjust for balance of trade questions that might arise with customers.

For example, on a localized basis, a procurement organization might opt to support global marketing with
a shared, data-driven infrastructure that supports a macro- view of activities all the way down to hyper-local planning. Such a structure would enable a global marketing organization and agencies of record (and local teams and local agencies supporting execution) to collaborate on improving measured outcomes across all media planning. But the same company might take a hybrid approach for direct materials categories, such as metal stampings, by centralizing vendor management data collection in support of in-country procurement teams (including supplier quality and development resources).

The changing of procurement operating models will no doubt need to be reflected in organizational design, as well as systems. But many organizations don’t currently have the information and technology infrastructure to enable a centralized management of complex categories effectively, let alone empowering more localized approaches. Clearly, solution adoption will need to evolve and catch up to meet these quickly emerging needs.

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