The Evolution of Procurement – What Does The Future Hold?

In our latest briefing paper written in conjunction with Comensura,  The Evolution of Procurement – and What it Means for Contingent Labour, we look at where procurement is headed in this world of “everything as a service.” We also look at how procurement is addressing complex spend categories like contingent labour to meet the changing expectations of stakeholders.

The paper is free to download here – and in our recent webinar we discuss some of the issues raised in the paper with Jon Milton of Comensura. “The Evolution of Procurement – Alignment, Flexibility and Procurement-as-a-Service” is still available to watch and listen on demand if you missed it - you can catch up with that here. Here is an excerpt from the paper, where we look at how procurement needs to adapt in the future.

 

THE FUTURE

Focusing on the wider organisational goals and competitive advantage should not prove too different from the stakeholder focus we talked about in the previous section. But it moves the game on further for procurement, from focusing on the goals of individual stakeholders to being aligned with the wider organisation.

That does help to answer one genuine dilemma that procurement can face in its stakeholder alignment phase: how to react when it genuinely seems that the stakeholder does not have the wider organisation’s best interests at heart? If procurement’s primary alignment is with the organisation, then clearly it has to respond if a budget holder is for instance acting in a manner that does not support this. Exactly how to do that is not simple and every case has to be addressed on its merits, but the principle is clear.

Back to more positive thoughts: reflecting organisational goals and driving competitive advantage first of all requires procurement to understand the business, how and why it succeeds. Various business writers and academics have suggested different sources of success and competitive advantage, from the ability to compete and win on a low cost basis, to innovation and competitive differentiation.

Any analysis will immediately confirm that procurement must follow different approaches depending on both the category of spend being addressed, and the nature of the business and the drivers of success. Are the ingredients for a food product important to its success, or is it enough that they are safe to eat? If we spent more on a better quality purchase, would we sell more or be able to charge a higher price?

Considering services spend categories, how important is marketing for instance to the success of the firm? If innovation and new products are key drivers, then supporting that by identifying and working successfully with the very best external marketing services providers will be more important than haggling over their margins.

Contingent labour spend may simply be a case of minimising cost at an acceptable level of risk, or it may be much more strategic, with access to hard-to-find talent and speed of engagement critical to the business (see case study part 3).

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