Five Key Procurement Trade-offs for 2017

Over the last quarter of 2016, I think I participated in more conferences, workshops and webinars than ever before in a concentrated period.  In some I simply observed, in other cases I spoke, chaired or facilitated the debate. Locations varied from the exciting to the inconvenient, the traditional to the exciting and novel.

But as we move into the bright and shiny new year, it is time to think about what I’ve seen and heard. What have I observed or learnt that might be of more general interest to our audience? What are the trends and issues that might be occupying the minds of the procurement profession in 2017?

So here are five thoughts which we will expand on next week. None are completely new, original or revolutionary, but they do give some sort of snapshot of the major issues and areas of interest that procurement leaders (and solution providers) in our industry seem to be focusing on and considering.

We’ll look at them as tensions, or trade-offs, just to make things more interesting, because in every case, matters aren’t totally clear cut. It is not a case of “this approach is right and this is wrong” – rather it is a case of trying to reconcile different approaches to arrive at the optimal route forwards. So here we go:

  • Value versus savings: how do we make sure organisations understand what procurement can deliver in terms of value and get away from “savings” as the primary performance measure for procurement activity? That's not a new question, progress has been made, but is still an issue for many.
  • Agility, speed and responsiveness versus process, compliance and governance: we heard a lot at various conferences about the need for procurement to move fast, to be aligned with an ever-increasing rate of business change. And yet, don’t we also have a role to protect our shareholders' (or taxpayers') money? How do we balance those sometimes conflicting objectives?
  • Simplified technology versus greater capability: in a number of areas there is a move to make software easier to use. Activities can then be delegated away from specialists to “end-users”. So as well as purchase-to-pay processes becoming more and more consumer-like, budget holders might run simple (or even not so simple) eSourcing processes themselves and everyone in the organisation might have access to intuitive and graphical spend analysis tools. Yet we also see tech getting smarter and deeper, for instance in the optimisation area.
  • The “procurement profession” versus the need for business skills: there is much talk of procurement people needing stronger general business and interpersonal skills – yet what exactly is it that defines a “procurement professional”? Is there still a core body of knowledge or skills that we mustn’t forget if we want to make “procurement” useful to our organisations - just what is it that we can and should do, that our internal stakeholders can’t?
  • Supplier collaboration and innovation versus tactical power plays: the need for savings in many industries and categories has not gone away. That means we still see some fairly blunt approaches used with suppliers. But some of the best sessions we’ve seen during the conference season have focused on how to capture innovation from supply markets and how to collaborate better with suppliers and potential suppliers.

So, some interesting discussion to look forward to in 2017, starting next week.

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