'Procurement teams will be smaller in future'

Procurement teams are set to downsize in the coming years because of improvements in technology, a consultancy firm has said.

“World-class” procurement teams require nearly 30% fewer employees than their less successful peers, and use digital technology to be more efficient, according to a report by the Hackett Group.

The report, based on data gathered from the company’s clients, said this translates to 21% lower labour costs and twice as much payback on investment in procurement compared to “typical” procurement organisations.

Nic Walden, the company’s head of UK procurement, said downsizing was a trend that would continue into the future as operational tasks become taken over by computers, allowing humans to spend more time building relationships with partners.

“We can expect to see procurement teams being smaller in the future,” said Walden, “but the role that we play will be a lot more empowered and valuable in terms of what we're doing and the value we contribute to the business.”

Operational aspects of procurement would increasingly become automated, he said, “getting those purchase orders out the door, and moving to a touchless buying approach”.

Subsequently, this would make the role of procurement teams “more data driven and stakeholder relationship driven”. 

Meanwhile, even more advanced digital technology such as artificial intelligence (AI) and analytics were being employed by top tier companies to further increase effectiveness and monitor suppliers, he continued.

“With more data at their fingertips firms can manage supplier relationships throughout the lifecycle, not just earlier on when the contract is signed,” he said.

Jaguar Land Rover, GlaxoSmithKline and Vodafone were among the companies already experimenting with AI and analytics, he said. But smaller organisations were also set to benefit from such advances in a “trickle down effect”.

“Technology providers will be building the more advanced capabilities into their systems,” he said, “and as those are increasingly cloud based, the entry point to using them will become much lower than it was before.”

He added: “It's almost a call to arms today that we need to educate and train our teams to get them ready to take advantage of these technologies and opportunities in the future.”

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