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    The Hackett Group 2024 CPO Agenda – Part 2

    The Hackett Group 2024 CPO Agenda – Part 2

    JAGGAER’s Strategic Response (Part 2)

    The annual CPO Agenda from the Hackett Group always makes fascinating reading, as it ranks the top ten current priorities of the world’s procurement leaders. These have changed over recent years as new challenges have emerged. Now we have entered a period of relative stability, spend management and cost reduction has moved back to the top spot, and ensuring supply continuity has moved from first down to second. Coping with inflationary price increases remains at number 3. I discussed the first three at length in my first article. Let’s now consider the remaining seven, and JAGGAER’s response. 

    4. Acting as a strategic advisor to the business  

    This is one of my favorites. As Hackett states, procurement wants a “seat at the table” and rightly so, as stakeholders seek procurement’s support on issues such as supply risk management, digital transformation and ESG objectives. But to do so procurement professionals need to understand and embrace the needs of those stakeholders. This calls for procurement to step outside of its comfort zone, gaining a deep understanding of value and the dynamics of the value creation processes. Armed with this deeper understanding, and by aligning with the organization’s strategic objectives, procurement can then leverage its expertise in areas such as category and supplier management, supported by the data and analytical capabilities in JAGGAER.

     

    5. Transform the operating model 

    I am excited to see this new entrant to the Hackett Top Ten! I think that it would have turned up earlier if it had not been for the instability of the past four years, which called for a lot of firefighting. With the need to simplify processes and meet rising expectations, and most notably with the challenges and opportunities presented by generative AI, procurement organizations are feeling the pressure to adapt and transform. The best solution will be the one that is optimally adapted to the company’s culture and strikes a balance between the constraints of the supplier market and the relationships between key internal stakeholders. These will change, so flexibility is a must (see point 10). JAGGAER is neutral on the question of what form the operating model should take; we can support all operating models of procurement organizations (e.g., centralized/decentralized and matrix/coordinated buying structures). The strength of our approach (notably, as compared with ERP providers) is that we don’t impose a structural straitjacket on the procurement function. Rather, our platform is designed to catalyze performance improvements.

     

    6. Pursue procurement digital transformation and modernize the landscape 

    As Hackett points out, digital transformation is an essential enabler of procurement’s ability to do more with less. The “more” includes, among other things, collecting more data around issues such as carbon emissions and compliance. This simply cannot be done manually. The “less” includes both process efficiency savings and hard cost savings and it is clear that enterprises that implement e-sourcing solutions achieve both. We can argue about the question of how much. According to Gartner, on average e-sourcing delivers a 14 percent saving on process efficiencies. In my experience, this is too low! Gartner also reports an average nine percent hard cost savings through e-sourcing. This, by contrast, might be over-optimistic! The actual figures will vary enormously between organizations – but the key point is that with JAGGAER, there will certainly be tangible savings. However, let’s not forget the more intangible benefits such as enhanced user experience and satisfaction. Our customers tell us that implementing JAGGAER software helps them to attract procurement talent.

     

    7. Strengthen third-party risk management visibility and capability 

    Hackett reports that the lack of visibility into third-party risk has been, and remains, a major concern for procurement teams in recent years, hindering their ability to react quickly to changing circumstances. It’s been a focus for JAGGAER for some time now, however. JAGGAER customers can now directly access millions of historical risk data points across different categories and regions to support better supplier management decisions. Compliance with national and international supply chain legislation, together with stakeholder pressure for environmental, social and governance (ESG) best practices, requires companies to perform systematic risk analysis. Our integrations with specialist service providers deliver the visibility and capability customers expect. For example, Prewave leverages AI to relieve the administrative burden this imposes on procurement and sourcing departments.

     

    8. Strengthen third-party risk management visibility and capability 

    JAGGAER delivers unique strengths in this area. Forward-looking intelligence, including predictive and prescriptive analytics, will increase the ability of procurement to respond quickly and effectively to change and deliver higher levels of performance to the organization. Advanced data analytics can help procurement departments to make the best spend decisions by incorporating risk analysis into the decision-making process. 

    By analyzing the data gathered in source-to-pay activity an organization can improve supplier relationship management while achieving better prices, faster order fulfillment, to control both direct and indirect spend and drive measurable financial benefits. 

    Procurement data analytics can moreover be used to tie together both recurring and unexpected environmental factors to increase accurate demand-forecasting, benefiting not only the procurement department but also the ent

     

    9. Embed sustainability 

    Hackett reports that the lack of visibility into third-party risk has been, and remains, a major concern for procurement teams in recent years, hindering their ability to react quickly to changing circumstances. It’s been a focus for JAGGAER for some time now, however. JAGGAER customers can now directly access millions of historical risk data points across different categories and regions to support better supplier management decisions. Compliance with national and international supply chain legislation, together with stakeholder pressure for environmental, social and governance (ESG) best practices, requires companies to perform systematic risk analysis. Our integrations with specialist service providers deliver the visibility and capability customers expect. For example, Prewave leverages AI to relieve the administrative burden this imposes on procurement and sourcing departments.

     

    10. Improve procurement agility 

    What Hackett means here is making procurement more agile at the process level and better able to pivot to support new stakeholder requirements, thereby delivering benefit to the business while raising stakeholder and user satisfaction levels.  

    At the 2024 Gartner Supply Chain Symposium/Xpo in Barcelona, Gartner stated that there is a 41 percent “value gap” between what technology can deliver (actual) and what it would deliver (desired) with the necessary governance. The main problem here is that many companies have implemented technology from procurement software vendors, but they have not done the necessary work before, during and after implementation to get users on board. Increasing adoption is essential. If we do things right, we free people up from manual work and this increases their ability to respond to new demands. 

    We do not claim to be perfect at JAGGAER, but we address the adoption issue at both ends of the implementation process. First, we work with companies to do the groundwork of convincing users of the benefits of the new solution. And second, we provide the tools to maximize adoption before, during and after roll-out. Our JAGGAER Adopt, Assist and Advise solutions harness the power of artificial intelligence to help users at every step.  

    And one of the most important consequences of deploying artificial intelligence in this way is that, as one of our customers recently said, it makes procurement a great place to work. By making procurement less routine and more agile, we can attract new talent into the function.  

     

    Download “The Hackett Group: 2024 Procurement Agenda and Key Issues Study”

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