Procurement Innovation: A Three-Year Vision
Times are changing, and it’s time procurement changes with them.
When I think about the last few years up until now, the priorities for procurement leaders have always been the same.
Demand management and cost savings.
Now not so much.
As procurement professionals we find ourselves in a really unique situation, there hasn’t been a shift like this in our industry ever that I can recall, so it’s tough to compare.
The last year and a half have completely changed the trajectory of procurement. The priorities for the foreseeable future are much different now than they were before.
I’m not saying that leaders don’t care about cost savings, that would be ridiculous, that’ll always be part of the day job, but now it’s much more strategic and nuanced.
Now it’s not so much about upfront cost savings, it’s more about looking at the entire business value chain and asking, “where can we drive the most value?”. Procurement innovation has become front and center, but innovation extends past technology.
Over the next three years procurement will go through massive changes, not just with technology, but truly changing how procurement is done, the skills that are required, and what future leaders will look like.
A Three-Year Roadmap for Procurement Innovation
When I look at what the future looks like for procurement, I see a focus on three key areas:
This is an idea that my colleague, Amenallah Reghimi, calls “The Golden Triangle.”
These three categories are the foundation of any kind of transformation, and I think it’s worth all leaders taking a long look at their organizations and breaking it down from a high level into these categories.
Once that’s done, you’ll be able to get a holistic view of your entire organization and be able to develop a really strong roadmap for the future.
People and Skills
This should be, in my opinion, the focal point of your three-year roadmap.
Without people, none of the other things can work, they’re the foundation of business and I think the core of digital transformation.
I often see leaders try to skip steps. Build the roof before the foundation so to speak, and this always backfires and causes problems.
For one it can cause a distrust of data and technology but also leads to an overall waste of an investment of both time and money.
Instead as procurement leaders, we need to focus on people first.
What I mean by this is two-fold, upskilling your current team, and attracting new, top talent.
Skills of the Future
As procurement changes, we all need to be agile enough to change with it, learn new skills, and adapt.
I think the core skill set that professionals and leaders alike need will be:
- Analytics-minded – Not to say you need to be an expert but be comfortable looking at and reading data to drive your decisions. Everyone needs to be comfortable enough making or reading a chart and clearly explaining what the next steps should be.
- Technology savvy – There’s no way around it. Technology will change procurement. But again, this doesn’t mean we need to be ‘coding experts’ simply that we should be comfortable learning and using different platforms and technologies.
- Fast and agile – We need to become comfortable moving fast and adapting. Changing course in the middle of a project isn’t necessarily a bad thing if conditions shift or someone has a new, better idea.
- Be bold – Nothing extraordinary will happen if we don’t take risks every once and awhile and break away from the ordinary. These should obviously be calculated risks, but in order to bring in new talent we need to be bold. Best practices will only get you so far.
- Be teachable and collaborative – Especially regarding leaders. We all need to check our egos at the door. Be comfortable learning something new, be open to new ideas and trying new things. I think this is the most important skill anyone can have regardless of profession.
These five skills represent the future of work. We all need to dedicate ourselves to embracing them because if we do, digital transformation will become so much easier, and you can attract the bright talent that procurement needs right now.
Next up are the process changes that procurement will need to address.
I don’t necessarily mean your specific “How will I get this done?” processes – these are important and also need to be evaluated – but I’ll touch more on general tactics and areas I see coming top of mind that those processes will need to be built around.
- Alignment – Digital transformation and visibility have been on the agenda for years, but progress has been exceptionally slow up to this point. Why? Board and executive alignment weren’t fully there. That’s starting to change today but it needs to be a real focus. I also think procurement leaders need to make it a point to make the CIO or CTO their best friend. Get really plugged into the decision-making process so you can understand what’s going on behind the scenes.
- Risk mitigation – I don’t think I need to sit here and explain the impact that COVID-19 has had. It’s now a top priority and responsibility that falls on everyone in procurement. This means a strong focus on visibility across your entire business.
- Sustainability – Luckily, this has stayed on the agenda and has actually moved up in importance. Sustainability isn’t just a good thing for society and the planet, but I think board members are recognizing that this is a real stock impact, negatively or positively depending on how you handle it.
- Diversity – Another one like sustainability, this is not just a good thing to do but can have a number of business benefits. When the pandemic hit, CPOs went to their suppliers and asked for new, innovative ways to avoid disruptions. It just so happens that having a diverse set of suppliers means different ideas, different infrastructure, and a new perspective that can help with risk and save you money because they’re more agile. That’s just one small example, there are plenty of other reasons to invest in diversity.
- Data & Speed – I’ve lumped these two together because they go hand-in-hand and also guide all of the above. There was a CIO who said to me, “Justin, I don’t actually care if I make the wrong decision as long as I made it before the competition.” Speed is everything in today’s market. Equally as important is making data-driven decisions. Data should be a foundation that you build all of your processes on.
Over the next three years, technology will progress faster than most of us probably realize.
Advancements in true cognitive machine learning applications, AI, advanced RPA, augmented analytics, and so much more are going to change the way we all do business.
The role of the day-to-day procurement professional will look drastically different in 2024 or 2025 than right now.
This is why it’s so important to focus on your skills and processes today.
But equally as important is building your data foundation and finding the right technology partner.
Data should be the top focus here, without relevant and clean data the best AI application in the world won’t be very useful.
It might be cumbersome at first, but data hygiene is an incredibly important step.
With that being said, finding the right technology partner can help you do that, and every step along the way.
There’s an important distinction that needs to be made between a technology vendor and a technology partner.
A vendor will sell you software and never speak to you again. You need to look for a true partner who matches up with your three-year roadmap and beyond who will help guide you along the way.
A big reason I’ve joined JAGGAER is that I feel that they embrace that role.
Once you have those two steps taken care of and have created a roadmap of where you are and want to be, the next step is taking action with technology.
Unfortunately, technology adoption hasn’t been nearly good enough.
The Harvard Business Review did a study and found that only 20% of digital initiatives actually succeed.
The reason? An alarming lack of digital adoption.
To that end, JAGGAER recently launched a solution called JAGGAER Adopt.
This solution is really designed to reduce any friction in your user journey. It helps build and provide intuitive training at the right moment, and gives full visibility into your team’s adoption, allowing you to measure your success.
There’s still a lot of work to be done here, but I think solutions like Adopt will go a long way to bridging the gap between innovative technologies and everyday users.
The only thing that I know for certain is the procurement profession will look much different in just three years’ time.
But if you focus on the skills, processes, and technology foundation today, you’ll create a competitive advantage that will tough to overtake.
The question shouldn’t be “What will happen if we move too quickly and make mistakes?” it should really be “What’s going to happen if we don’t?”
Be bold, take risks, let’s shape the future of procurement together.