Driving the change
By Brian Umbenhauer, Ryan Flynn, Pierre Mitchell- Highlight
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CPOs continue to find it difficult to attract and retain talent. The talent solutions of the future need to go beyond training and evaluate emerging talent models. CPOs who are able to master the complexity of existing models such as BPO while also employing new models such as the agile/contingent workforce will be better suited to overcoming key talent challenges.
For years, many chief procurement officers (CPOs) have struggled to retain qualified talent and recruit new team members needed to address increasingly complex procurement charters. At the same time, talent models are rapidly changing, as are the compliance concerns related to contingent workers and a global workforce. In an effort to master talent complexity, CPOs will have to not only tackle the industrywide dearth of analytical and technical skills needed for success but also embrace new ways of thinking about talent.
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Procurement organizations continue to face a high level of competition for adequate talent, with typically one qualified candidate for every six job openings, according to a study of supply chain talent gaps by DHL.1 CPOs still have to invest significant time and effort to find the needed levels of technical and analytical competencies, as well as leadership and professional competencies required for executing high-priority strategies. Yet there are considerable barriers to doing so. In the same DHL survey, 70 percent of respondents stated that they believe the profession lacks the aura of status and opportunities for career growth. This hiring challenge was echoed in our survey, where 55 percent of companies have found it more difficult to attract talent in the last 12 months and only 9 percent found it easier.
Since talent itself is a supply market of sorts, one interesting finding in our study had to do with talent sourcing. While 84 percent of all companies had full-time workers making up more than three-quarters of their procurement teams, we found that 28 percent of the complexity masters drew from contingent labor sources as compared to 20 percent for all companies. External talent sources take many forms and the study indicated many such channels, including independent contractors (21 percent), on-demand category expertise (17 percent), and offshore centers (7 percent).
Mastering talent management comes down to the challenge of addressing the complex features of the procurement talent market: its shortage of well-suited applicants, the gap of current employees’ skills against the capabilities needed to execute, and the increasing importance of digital procurement to how CPOs approach talent strategy. Mastering this complexity involves procurement leaders finding the optimal balance of training for current employees and recruiting of “A” players (both externally and from other business functions).
Demand for top talent in the global procurement space continues to outstrip supply, and the demands and expectations from corporations continue to grow. It’s encouraging to see that investment into training in both technical and softer skills appears to be on an upward trajectory as organizations attempt to close this gap and build talented teams that can deliver sustainable value for their stakeholders. The data shows what we see every day, that demand for softer skills coupled with analytical insight is where capabilities need to be enhanced further. As technology evolves, many of the processing and transactional tasks that procurement has traditionally carried out will disappear. I believe this will mean that procurement departments will certainly get smaller. At the same time, while you may have fewer people, it will free them up to concentrate on the more strategic challenges and opportunities businesses face that can be supported by the external supply base and the interpretation of data. These leaner teams will be populated by more experienced procurement leaders with a wider range of commercial expertise, who are skillful and effective at operating at a higher level within their companies. It is here that those with exceptional strategic business partnering skills coupled with supply market insight built on the foundations of data and analytics made available to them will shine through. In addition, as the data shows, I suspect we will also see an increase in the use of flexible and agile workers who will be increasingly hired at a point in time for a specific program or project that requires deep subject matter expertise.
These trends ultimately could see retained procurement teams taking on a broader, relationship-based commercial role, in addition to the traditional procurement scope, perhaps working on mergers and acquisitions, or projects around monetizing intellectual property. In-house corporate procurement teams will play a much greater role in adding value, managing risk, and maximizing return by utilizing an agile combination of in-house procurement skills, technology, BPO providers, and the gig economy.
—Lucy Harding, partner and global head of the procurement and supply chain practice, Odgers Berndtson
The impact of losing this talent war can be keenly felt by CPOs and is evidenced by the fact that only 46 percent of them felt that their teams could sufficiently deliver on the procurement strategy, a decline from the 49 percent figure cited in the 2018 study (figure 1). Much of this gap is likely due to the more complex skill sets and competencies required by procurement organizations to deliver on a broadened value proposition that certainly includes digital-related capabilities. The complexity masters were much more confident with their teams though, with 66 percent of those CPOs having confidence in their teams’ ability to execute.
Another strategy to help close skill gaps is training. For technical procurement skills, strategic sourcing/category management (68 percent) and negotiations (59 percent) were the top two “usual suspects” winning priority for training (with project management coming in third at 40 percent) (figure 2). Interestingly, though, supplier collaboration and business partnering (which can be supplier-related or stakeholder-related) came in with a strong 64 percent of CPOs intending to train in this critical area that effectively applies the best practices of CRM to the function of supplier relationship management (SRM). This area also requires other “soft skills” cited in the report, such as manager training (38 percent), conflict management (32 percent), and emotional intelligence (31 percent), skills especially needed to perform transformational work (figure 3).
The real change for training comes in the digital realm, and it includes both vendor-specific training in source-to-pay (S2P) applications and training in more generic but evolving technologies such as analytics (which can take the form of basic visualizations/dashboards or more sophisticated predictive analytics and AI) (figure 4).
Looking beyond training and at the bigger picture of talent models themselves, CPOs who are able to master the complexity of existing models such as BPO while also employing new models such as the agile/contingent workforce will be better suited to overcoming these key talent challenges.
As our 2019 Global Human Capital Trends report explains, the number of self-employed workers in the United States is projected to triple by 2020 to 42 million people, meaning a large and growing portion of the workforce with needed skills and specializations will be accessed through alternative talent channels rather than traditional means.2 To help close the skills gap, CPOs should embrace a wholesale rewiring of how organizations operate as it relates to alternative labor—one that allows them to connect the appropriate talent with the appropriate roles no matter how that talent is sourced. Yet for most organizations, this approach is far from common: Only 11 percent of supply chain and procurement functions use alternative labor extensively, whereas in functions such as operations and IT, that share climbs to 25 percent.
Ultimately, masters of talent are masters of outcomes. They are able to deliver value with all of the resources available, coordinating talent sources to their desired outcomes.
So what action can CPOs take to help improve their mastery of talent? Here’s what they can do:
1. Make talent investments that best align with the business’ key objectives. CPOs need to make sure their talent investments mirror their organization’s strategy. There are numerous factors to consider, and their investments will look very different depending on their environment. Key questions to ask include:
2. Widen the talent search net. Reshaping the talent strategy can take many different forms. Expanding the scope of sourcing talent could include reskilling or upskilling current workforce through training, developing channels for recruitment (e.g., by working with local colleges and universities to build procurement and supply chain curricula), and shifting the approach to BPO, external support/gig workers, or supply chain managed services.
3. Go digital: Tap new digital marketplaces to access hard-to-find talent in the gig economy. In the past several years, we’ve observed an increasing shift of knowledge workers away from traditional work arrangements toward freelance arrangements. The gig economy is no longer made up of simple tasks and on-demand delivery; it also increasingly consists of complex services and highly skilled workers, many of whom are intermediated by digital talent marketplaces. New platforms have arisen to help businesses not only find this key freelance talent but also manage interaction with them—from project scoping through to payment. So, if there’s a skill set or knowledge base (e.g., particular expertise for designing a sourcing strategy for a new category) a procurement organization sorely needs, they would do better to consider a 21st century approach.
Deloitte Consulting LLP's Supply Management & Digital Procurement practice marries cutting-edge digital tools with market-leading consulting services to drive insight around spend management and deliver increased cost savings at a faster pace. Aim for the best return on investment on your third-party procurement spending through Deloitte's cloud-based solutions and services, driving category management, supplier management, and sourcing of indirect and direct materials.
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