All areas of organizations are being digitally transformed, and the changes are really being noticed in modern procurement teams. Procurement professionals and leaders are seeing their job descriptions changing more than ever before. Digital technologies are transforming day-to-day processes as well as internal and external interactions. Recruiting teams and procurement leaders have begun to shift their approach to hiring and retaining new talent.
Deloitte’s recent Global Chief Procurement Officer Survey 2018 found that 51% of procurement leaders do not believe that they have the capability in their teams to deliver their procurement strategy. The same report also found that 72% of procurement leaders are spending less than 2% of their budgets on training and development budgets for their team.
These stats show us that while the need for procurement teams to develop new skills is present, there may not be a defined path for procurement professionals to develop the required skill set. The main areas of focus for procurement leaders seems to be on technical procurement skills (41%) and soft skills (36%.) Only 16% of procurement leaders chose developing digital skills as the main focus for their team in 2018. This is surprising considering 72% indicated that procurement staff possess only some or no capability to maximize use of digital technologies.
Some organizations will choose to develop the skills of existing procurement professionals. Others may opt to hire people who already have these skills from outside of the company. Regardless of how organizations decide to obtain their talent, there are three skills that will prove vital to the success of procurement teams moving forward.
The growing influence of modern procurement teams within organizations means that there is a growing importance on their ability to manage internal relationships. Externally, procurement teams deal regularly with the company’s suppliers.
Supplier relationships are extremely important for organizations as favorable relationships with suppliers can improve credit terms and lead to discounts. The graph below by PayStream Advisors shows that improving supplier relationships is a high priority for managers.
Unfortunately, external factors can affect procurement’s relationship with suppliers. For example, late payments, disputes, and poor data management can lead to decaying relationships. In the same way that buyers prioritize certain suppliers, suppliers can often prioritize or de-prioritize buyers resulting in varying qualities of service. Suppliers need to be offered consistent support so that any potential problems can be flagged early on and resolved. For these reasons, it is important for procurement teams to be able to manage relationships both internally and externally.
Data Analytics and Reporting
Analytics is the area of technology that will have the most impact on procurement in the next two years, according to Deloitte. In fact, this has been the case for the past two years which demonstrates the potential of leveraging technology to gain insights within the analytics space.
In Accenture’s Procurement’s Next Frontier Report, Accenture predicted that “In 5 to 7 years, analytics will be at the center of a more sophisticated decision-making and business intelligence engine in procurement that is connected to all levels of the supply chain.”
So how are procurement teams leveraging these technologies to fuel better decision making? Deloitte found that intelligent and advanced analytics are being used for cost optimization (50%), process improvement (48%) and management reporting (45%). These are areas that are essential for procurement teams to be viewed as trusted advisors to the business which is a high priority for procurement leaders in 2018.
Technology is now embedded in almost every process of the procurement function. There are four areas in the procurement process where Deloitte have noticed a sizable impact of digital technologies. They believe that digital technologies are allowing the procurement function to become more predictive, automated, proactive, and intelligent.
With that said, Deloitte found that only three percent of procurement leaders believe their staff possess all the skills required to maximize use of digital capabilities. While digital technologies can help procurement teams to realize huge benefits, organizations are struggling to find procurement staff with the appropriate skills who are able to embrace these technologies.
Procurement staff need to seize the opportunity that has presented itself in the form of technology. We find ourselves in a landscape where only 72% of procurement leaders believe that procurement staff possess only some or no capability to maximize use of digital technologies. There is a clear disconnect and this is an area where a procurement employee could separate themselves from their peers when applying for a position.
Modern procurement leaders are building agile teams to meet the ever-evolving demands of company stakeholders and suppliers. The buying process is vastly different now to what it was a decade ago which requires an entirely new approach and skill set. Leaders need to work on providing opportunities for their teams to learn these required skills.