Digital transformation will be essential to cope with greater workloads and fewer resources © Yuichiro Chino via Getty Images
Digital transformation will be essential to cope with greater workloads and fewer resources © Yuichiro Chino via Getty Images

What are procurement's five 'critical development areas'?

Will Green is news editor of Supply Management
25 March 2022

Five “critical development areas” for procurement have been identified in a report.

The report, The Hackett Group’s Procurement Key Issues 2022, said the areas “ranked high in importance but low in confidence to deliver”.

“If procurement cannot overcome challenges in these areas, it may be difficult to address critical priorities like supply risk objectives,” said Hackett.

The five critical areas are:

1. Enable corporate sustainability

This priority has moved dramatically up the rankings between 2021 and 2022.

“The expectations and demands of procurement’s stakeholders (eg, employees, customers, governments) around supplier sustainability have elevated this priority more than any other on procurement’s agenda,” said the report.

2. Accelerate digital transformation

This has become an “essential enabler of procurement organisations’ ability to deliver new services amid constrained budgets”.

The report said procurement workload was expected to increase by 11% in 2022 “but with no increase in headcount and even a reduction in operating budget”.

3. Improve analytical, modelling and reporting capabilities

The report said “success increasingly requires a data and insight-driven approach to value identification” and it was necessary to make “ever-expanding sources of reliable, up-to-date and forward-looking data and intelligence available to end users”.

4. Aligning skills and talent with changing business needs

A modern vision of procurement requires “strengthening skills and competencies, whether to improve stakeholder engagement, meet raised business expectations, or develop new capabilities”, said the report. Hackett said the Great Resignation had exacerbated this challenge and put the focus on retention.

5. Improving procurement agility

This includes an ability to anticipate, predict and rapidly react to shifts in the external marketplace. “This in turn is critical to rapidly-changing business priorities, supply markets and a robust supply risk management capability,” said the report.

Hackett said areas around data, skills and agility were linked.

“It will be difficult to achieve supply risk objectives without a good handle on data sources that drive risk management decisions, teams that understand how to use data, and capabilities for sensing and reacting to shifts in the market,” said the report.

Hackett said the pandemic had handed more power to suppliers “and procurement must adapt”, while the war in Ukraine would increase disruption concerns.

“Fallout from the growing conflict with Russia over Ukraine may further accentuate supply disruption concerns,” said Hackett. “Keys to addressing this include developing capabilities in supplier relationship management, improving analytics to better identify and predict supply chain challenges, and overall digital transformation.”

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