The Future of Procurement Part 3

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Technology and the Procurement Skill Set 

It’s clear that we believe that the increased use of technology by procurement and supply chain presents real opportunities for the function to advance in many different ways. Based on what we hear from our attendance at various events and through the conversations we have all the time with the procurement leaders in our network, the obvious area of advancement is in the use of technology and particularly the power of the data.

So is this the area that can unlock the opportunity for procurement departments to move beyond a savings dominated agenda? Will it make their contribution more important strategically, increasing efficiency and releasing resources in the process?

We recently observed a respected leading procurement consultant saying words to the effect that future procurement teams will need to develop new skills as transactional tasks become increasingly automated due to innovation. He ventured that analytical roles will grow in importance as will the need to track the impact of the solutions otherwise “how will we demonstrate the value of the investment in the software?”

Some more thoughts from Justin Sadler-Smith of SAP Ariba on the subject of how the latest generation procurement technology/software can help facilitate the evolution of the procurement function from a savings obsessed agenda to a broader contribution for mid-market and enterprise organisations.

“Savings is the day job and still the focus for most procurement professionals. However, the actual savings reported are regularly challenged in term of P&L impact and, taken in isolation, can undermine the significant value a procurement professional can deliver. “Technology exists today to provide a single source of truth with supplier engagement across the Procurement Lifecycle.
This is either through single platform or via best of breed… the preference being the former to avoid costly and time-consuming additional integration. “It still amazes me that some organisations have still to be persuaded on the value of Cloud.

This opens up so much possibility, particular with big data and transparency. Done with the right applications, this data becomes actionable information available across the organisation to make informed decisions. This is where the procurement function can shine and deliver far in excess of questionable cost savings.

“For example, by allowing the transactional areas to be automated, Procurement professionals can now be targeted to strategic initiatives i.e. supplier risk mitigation and innovation. “Those organisations who have taken this step with utilising the latest technology have a clear competitive advantage and Procurement has a seat at the table rather than under it.”

We’ve done a lot of research on this and we believe the future of procurement is doubtless going to be shaped by data, but this means more than simply digitizing invoices. Gathering data from sources such as Aggregator, Northern Lights and SupplierIQ can allow you to build strong models when combined with your own data, but less obvious choices can have a huge impact on the efficacy of your overall forecasting too.

A good example of this is at IBM – they acquired The Weather company in order to make use of the massive amount of data they have and use it to inform clients about possible risks in the supply chain long before they become an actual issue. Utilising data in this fashion doesn’t mean replacing the whole procurement department with data scientists; at IBM they’re evolving their current procurement practitioners into consultants by making them more aware of data.

The future procurement consultant may well be a hybrid data scientist and procurement professional, and with few people in the industry with this specialism, they will be in high demand. The new generation of Chief Data Officers or Chief Digital Officers as some organisations are branding them are all about how they use the data, not just the digitising of it. Tools like Watson Analytics are going to be a big part of this and procurement needs to embrace them.

Of course procurement practitioners will still need relationship building and influencing skills as has been the case for many years, but something like AI can be hugely helpful by improving efficiency in areas like the development category management strategies. What is clear is that the procurement skill set is going to evolve further on the back of advancements in technology. There is an opportunity to use this to change the perception at board level and procurement leaders will need to decide on a strategy of how to achieve this. They will need to hire and/or train these new skills whilst maintaining a strong sense of the core skills like stakeholder engagement and strategic sourcing.

As mentioned earlier in this report, we are starting to see an increase in specialist roles dedicated to the use of data in procurement departments. It’s still a relatively rare skill set and one we would encourage ambitious procurement professionals to embrace with an eye on their professional development. We are working with The Data Science Foundation to promote procurement as an attractive career choice, particularly for their growing graduate membership. We expect our clients to benefit from this association in future as we seek out the best talent in the profession.

In case you missed it:
Future of Procurement Part 1 – Brexit
Future of Procurement Part 2 – Procurement CSR

And if you’d like to read the full Insider report you can download it here.