Hackett Group Publishes Procurement Key Issues Report

The latest Hackett Group “Procurement Key Issues” report is titled, The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation.

It is a good piece of work as usual, with the authors being Hackett veteran Chris Sawchuk and also Constantine Limberakis – we didn’t know he had joined Hackett in late 2017 after working for tech firms such as Determine and HICX. He always seemed like a smart chap so we wish him well at Hackett!

The study methodology is not totally clear; was it based on survey, interview or both? We suspect survey, but it isn’t clear – neither is the sample size or composition. But “digital” is a key theme of course. The procurement leaders involved “expect that 30% of procurement processes will be touched by digital transformation activity in 2018 …. Fully 95% believe digital transformation will fundamentally change the way procurement services are delivered within two to three years”.

But cost-cutting is still a priority, and internal procurement budgets are being (slightly) cut – down 0.3% on the year, despite a rapidly changing business environment. So the respondents’ goals for the next year “reflect their resource-constrained and risky environment. Among these are improving their agility, elevating their role to that of a trusted advisor, enhancing their cost-avoidance capabilities, and supporting enterprise digital transformation”.

However, some of the findings are familiar in that frankly they seem to come out of every survey of this nature. Procurement must improve on four key capabilities, and yes, one of them is that we must “align procurement skills and talent with changing business needs”. Its hard to imagine anyone suggesting we should align skills with the business needs of 17th Century Ottoman empire, so this does seem a little obvious.

We’re not being dismissive of that comment but we have heard a lot of this before. The other three capabilities are also not exactly new ideas; measuring and managing procurement performance and business value, and obtaining more value from both category management and supplier relationship management. Hard to disagree again  but not exactly front page news.

But as usual with Hackett, there is a lot more substance beneath the headlines, and readers will find information and ideas of value along with some indications of future direction for the profession. Respondents believe that 27% of current procurement roles will  be affected by digital transformation in the current year; we suspect over a slightly longer timeframe that figure is likely to be nearer 100%.  And it is interesting to see that a sizeable percentage of organisations (more than we might have expected)  are now piloting emerging tech such as robotic process automation, Blockchain and AI.

The final paragraph of the report suggests “procurement must develop its strategic capabilities (such as category management and supporting supplier innovation ) via digital transformation, while continuing to deliver excellence in the basics (compliance, operational process efficiency and savings identification)”.

That all sounds pretty reasonable, but we also have to “meet the needs and wants of internal stakeholders and suppliers through investment in talent management and technologies that will improve data collection, performance measurement, risk mitigation and collaboration”.

It’s well worth a look anyway, and you can get your copy of the report here, free on registration.

 

 

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