Charting the course
Why procurement must transform itself by 2020
The repercussions of the financial crisis of 2008 forced supply chain organisations into a period of cost reduction and containment. Now as fresh shoots of growth begin to re-emerge, leading supply chain executives are turning to a new look procurement function to act as the springboard for future growth and stability. The necessary capabilities for this procurement transformation have been identified, the challenge now lies in making this transformation a reality.
Executive summary / key findings
Over the period of 2008 to 2014, many Irish organisations turned to procurement to help facilitate aggressive cost cutting targets necessitated by the global economic downturn. Cost reduction initiatives, reactive risk management, commodity and currency volatility all compounded to become a costly drain on capital and resources for supply chain organisations. In a marketplace where resources have been scarce, Irish supply chain executives searched relentlessly for new growth channels to offset these external environmental factors. Furthermore, recent cases of international supply shortages as a result of natural disasters and supply chain scandals such as the horsemeat scandal have placed an increased emphasis on traceability and transparency. This has now forced leading organisations to rethink how their procurement function operates.
Ireland as a small open economy is extremely sensitive to these increasing pressures from the global market and with projections predicting a continuation of these trends, the onus is now on Irish organisations to develop new initiatives aimed at positioning Irish firms to the forefront of supply chain capability.
Sourcing & Procurement Outcomes and Expectation of 2020
In this piece, we offer a framework of advanced capabilities and competences that will shape and mould a new look procurement function, primed at delivering sustainable benefits well into the next decade. Many of todays procurement fundamentals will stand for decades to come; category sourcing, baseline procurement systems, human resource management, purchasing performance, and knowledge management, however the purchasing organisation of 2020 will demand more.
- Improved Financial Performance
- Proactive Risk Management
- New Customers/Stakeholders
- Robust Supply Base and Supply Chain
With the expectation that the decade ahead will continue to be shaped by increasingly volatile market factors with economic, competitive and regulatory pressures continuing to threaten Irish competitiveness, the onus is now on leading organisations to stimulate a procurement transformation to act as the core growth channel of the future.
As the Irish economy takes its first tentative steps on the road to recovery, leading Irish executives can turn to a transformation of their procurement function to act as catalyst for superior business performance. Getting this right can revitalise your organisation whilst also repositioning the organisation to seize the newfound opportunities available in the wake of the banking crisis. The leadership challenge now exists in how best to begin this transformation, and our team at Deloitte have the industry leading talent and expertise required to provide industry specific insight and advisory support to Irish organisations in beginning the journey towards a procurement driven business transformation.