Perspectives

Considerations for the future of procurement

Procurement’s role and importance is expanding as CPOs deliver against an increasing set of priorities and expectations linked to the pandemic, Brexit, expanding regulation, M&A activity and evolving digitisation (a constant stream of “out with the old and in with the new”).

Thus the need to drive more agility, flexibility, productivity and innovation in the procurement operating environment. The 2021 Deloitte CPO Survey shows that driving operational efficiency is a CPOs number 1 priority – higher than cost reduction - which means the ecosystem it operates in needs to optimise the management of its people, processes and technologies, while staying ahead of the curve and delivering against the corporate ESG agenda. We will explore 3 key concepts that the procurement operating model of the future will need to consider.

  • The evolving role of the category manager. The next generation of the procurement workforce will need to be more fluid in the way it delivers core procurement services, with increasing alignment to finance, supply chain and customer facing functions. In some cases, we see the role of the category manager evolve with an increasing share of time spent on business partnering, design-to-cost activities and product portfolio management – truly serving the needs of the business with the final customer in mind. Traditionally however category managers may not have been set up with the right assets or environment to strategically manage that relationship and so in more complex, matrix-type organisations, the business partner is often a separate role, working hand in hand with the business and the category manager to pro-actively manage and channel demand. As business models change and the future of work becomes agile, categories are free to be centrally managed across locations which will likely see a focus on fewer categories and more business partnering over a wider span of land, with skills and knowledge transforming as categories morph, expand or die out. HR and tax considerations as well as the nature and standards of processes, compliance and governance surrounding procurement will be ever more important as this happens.
  • A boundaryless workforce. There is no doubt that COVID-19 has accelerated the shift towards working from anywhere at anytime, and the traditional onshore/ offshore model might well become a thing of the past. We already see a rise in centres of excellence; teams of experts in global hubs working “as one” with traditional procurement teams “closer to home” across data management, assisted sourcing, category management and others. These centres balance proximity, price point and delivery culture to bring elevated capabilities across the entire procurement operating model. Hybrid outsourcing models will be better embedded to ensure knowledge transfer and longer-term permanent benefits as the needs for and abilities to deliver procurement change.
  • The digital agenda. In Deloitte’s 2021 CPO Survey 76% of respondents said digital transformation was a priority over the next 12 months, 20% more than the previous year. Digital capabilities will continue to enable procurement and stakeholders to collaborate and interact smarter and on demand – and with 42.8% of the procurement software market covered by tail digital suppliers (IDC, 2021) there is a lot to be said about niche digital start-ups disrupting the way certain parts of source to pay operate in the future. However, we see such innovative solutions as complementary add-ons to single suite source to pay platforms critical to driving standardisation and harmonisation which so many organisations are still striving for today. As the digital agenda progresses and bears fruit for organisations at different rates, it’ll be vital for procurement organisations to continue to transform at pace.

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This blog is authored by Sabrina Morton, Senior Manager, Deloitte.

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