Earning trust top focus for procurement in 2015 – Hackett Group

19 March 2015

Most procurement departments are expecting limited budget growth over the next year and will need to restrict transformational projects to a select few initiatives, according to the Hackett Group.

Its report says procurement will focus on three main transformational areas in 2015: cultivating the function’s role as a trusted advisor; investing in next-generation training and development and harnessing big data.

Respondents to the group’s Procurement Key Issues survey for 2015 expected their departments’ operating budgets to grow on average by just 2.7 per cent.

Nearly three-quarters of respondents ranked making procurement a trusted advisor as their top priority for 2015, followed by increasing agility. But the report said organisations’ capacity to address these issues was limited. Therefore procurement departments saw it as vital to develop capabilities, especially through harnessing big data and renewing training and development efforts.

To enhance talent management effective training and development initiatives such as stretch assignments - where employees are given tasks slightly beyond existing skills levels - are already becoming more common and will continue to grow. Procurement organisations will also need to increase skills to take advantage of advanced analytics technology.

While most companies have basic reporting and data-access capabilities such as scorecards and self-service, more advanced capabilities, such as multi-dimensional analysis, are less commonplace. Highly sophisticated techniques like predictive modelling, risk analysis and data mining, are being used by only a “small minority of organisations”.

Expanding influence over spend and deepening influence on complex indirect categories were fourth and fifth priorities in this year’s report. These were followed by increasing internal stakeholder satisfaction, reducing supply risk and improving supplier delivery performance.

Procurement departments believed they had a high ability to address more conventional priorities like reducing or avoiding purchase costs and increasing stakeholder satisfaction levels.

Significant investments in strategic sourcing, category management and SRM are beginning to pay off, the report found.

“In many cases, these capabilities are reaching a relatively high level of maturity,” it said. “But there is still work to do.

The report said that while "business agility" was once a favourite corporate buzzword, only for it to take a back seat once the recession set in, this time "agility will prove to be a lasting, fundamental attribute" not "just another passing business fad."

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