From Talent to Category Management: 4 Critical Development Areas for Procurement

Cybersecurity and access to critical talent are the top worries on CPOs’ minds, according to a Hackett Group report, The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation. The importance of cybersecurity is compounded by the EU’s Global Data Protection Regulation (GDPR), which goes into effect May 25.

In addition, cybersecurity and access to critical talent are also expected to be “high risk” in the near future by three quarters of procurement professionals who took part in The Hackett Group’s annual Key Issues Study.

Digital transformation is crucial in tackling both cybersecurity and workforce challenges. Notably, however, supporting enterprise digital transformation objectives is one of the areas that procurement is least prepared to address.

Other development areas deemed to be critical include expanding procurement’s scope and influence, improving procurement’s business agility and deepening influence on complex spend categories to drive value beyond sourcing. These are all areas that are important yet difficult to address.

Staying in touch with changing stakeholder demands is core to agility. As the report’s authors Constantine Limberakis and Christopher S. Sawchuk point out, “internal customers want the same customer-friendly buying experience they have come to expect from business-to-consumer service delivery models (e.g., Amazon, Alibaba, eBay).”

The report also highlighted four critical development areas for internal procurement-related issues:

1. Align procurement skills and talent with changing business needs
2. Measure and manage procurement performance and business value
3. Obtain more value from existing suppliers through supplier relationship management
4. Obtain more value from existing categories through category management

Taking a closer look at the first critical development area, the percentage of procurement professionals who viewed the alignment of procurement talent with changing business needs to be highly important or critical has increased from 73% to 77% in 2018.

Some procurement organizations are tackling this challenge by looking outside traditional skill areas. More than a quarter of respondents to The Hackett Group’s Key Issues Study said that they’re evaluating hiring from non-procurement fields, such as physics or data science.

There is a notable gap between the percentage of respondents whose organizations consider the measurement and management of procurement performance and business value as highly or critically important (76%) and the percentage of respondents whose organizations are actually up to the task (56%).

The report underlines the importance of looking for other ways of adding to business value, beyond price savings. These opportunities can include improving supply risk management and protecting brand integrity.

Supplier relationship management is central to the third critical development area. Although 74% of respondents acknowledge the value of getting more value from suppliers through supplier relationship management, 51% have limited ability to put it into practice.

The same can be said for the fourth critical development area involving category management. A vast majority (83%) of respondents said that obtaining more value from existing categories through category management is of high or critical importance, but only 56% say that they currently are able to meet this objective.

Check out the full report here.