What will procurement look like in 5 years’ time? A Chief Procurement Officer’s view
Every function in your organization is experiencing digital transformation and grappling with unprecedented change. Procurement is no exception. To help put that change into perspective, we’ve asked Unit4’s Chief Procurement Officer and Workspace Experience Director, Esther Haaksman, to share her views on the function and where it’s headed in the future.
Esther’s been working in procurement for over 25 years and has been a CPO for more than 10. She sees it as her mission to put procurement in a position to help the whole organization achieve its aims.
The recent change in Procurement has been so rapid that some predict that automating supplier management and authorization through technology will eventually make procurement, as a discipline, obsolete.
I disagree with this view. Since I’m a procurement leader, that probably isn’t surprising. Let me break the situation down:
The idea that technology will make procurement obsolete makes the mistake of reducing the discipline to only its most visible functions for end users. Procurement, ultimately, is about managing external stakeholder relations. Technology can clearly support that but can never replace the full procurement role.
Procurement is one of the few functions with a full view of the organization thanks to its relationships with everyone. A successful procurement specialist will be in constant dialogue with both internal and external stakeholders to establish parameters for effective tactical and strategic buying – and to establish better relationships with the people they buy from.
This is particularly true in service-based organizations, where there are fewer simple operational purchases than in other sectors, but ongoing supply chains are still required for vital operational services and equipment.
That said, procurement specialists are still experiencing some major changes in their roles, including:
A shift to more strategic responsibilities. Some of the more executional aspects of the procurement role are being steadily automated, freeing up specialists to pursue higher-level value-adding tasks. This means in the future there will probably be less of a need for “operational” procurement specialists.
However, it’s impossible to automate relationships and human interaction. Procurement specialists are becoming multi -taskers – they must be proficient with financial concepts including treatment of deals, must have legal knowledge in negotiating contracts to mitigate risks, and must know the supply base so when things change in the world, they have options to fall back on.
Greater involvement in the way companies manage the environment of work. One of the biggest and most noticeable changes to my own role has been stepping into the combined role of a “Workspace Experience Director” – partly due to COVID transforming the way our employees want to work and use office space.
Procurement represents a natural ally in the search for flexible working environments. After all, we’re already adept at sourcing and vetting suppliers based on business requirements.
Procurement will be involved in buying processes sooner. As part of the move towards a more strategic future for procurement, we will likely see less and less of the old-school “operational” model. Instead, procurement people will work more closely more early on to take briefs from internal stakeholder experts and specialise in specific areas of buying, which can better inform scoping and negotiation processes. This will in turn help improve our ability to manage supplier relationships and ensure greater strategic and tactical fits for organizations.
What challenges will Procurement need to face and overcome in the future?
The need to communicate the procurement value add more convincingly to ensure a seat at the table. In many organizations, procurement is still viewed as a process of bean counting and haggling. It’s also often the last touchpoint in the buying process – brought in at the end simply to tick a box and haggle over price. While lower value purchases will probably continue to be decided on price, strategic buys must be based on the suitability of the supplier as the right strategic partner for the business.
Achieving this kind of involvement in business processes early enough to make a difference in how money is spent requires access to rock-solid internal and external data that can better inform decisions on spending. You must be able to demonstrate how early procurement involvement improves metrics like TCO and ROI, and how “soft” qualities like strategic supplier fit impact the bottom line. Stakeholders will benefit sooner from the skills of procurement professionals, such as risk mitigation and management, compliance, sustainability, ARR maximisation and ethics.
Procurement also has a particularly important place in M&A for service-based organizations: they have the specialist skills and data-awareness to review the supply side of a new acquisition, identify and mitigate risk, spot potential spin-outs, and identify economies of scale to drive synergies.
The need for greater agility and adaptability in the buying process. With uncertainty only increasing as we emerge from two years of unprecedented disruption, the ability to quickly scale agreements up and down and allow your colleagues access to the tools they need to do their jobs will be essential, meaning you’ll need better visibility of how spend impacts performance and better visibility of where savings and synergies can be found.
Empowering people to make their own purchase decisions. Self-service tools are a baseline expectation in all business functions. Tools like Unit4 ERP can help you here by allowing you to automate decisions for purchasing within certain limits and giving your colleagues up-to-date access to dynamic supplier shortlists, helping them buy faster while still playing by the strategic gameplan you’ve developed for the organization. This is a step up from managing the process via Excel, and removes much of the administrative barrier that’s holding your people back.
Talent was already scarce – but now it’ll be harder to find than ever. Because most procurement specialists “fall in” to procurement, “green” talent has never been easy to find. But skilled talent is now at a higher premium than ever. Finding it and retaining it will require you to offer a working environment that cuts through the drudgery of admin and allows them to focus on the work of supporting strategic business goals. Shaping talent must also be a core priority – the new procurement professional must be a skilled negotiator capable of keeping track of compliance, sustainability management, and specialist purchasing, rather than a procurement “operator” engaged in the mechanical process of buying.
How can Unit4 help procurement teams to achieve these goals?
Unit4 ERP supports procurement teams with a clear, single source of truth for all organizational spending, allows specialists to easily set automated processes, rules, and exception handling processes without the need for coding or customizations, and empowers people to make their own decisions within the rules.
Far from automating your role, our software frees procurement specialists to pursue more strategic approaches to buying and supporting organizational financial and operational goals. Giving you the power to optimize supply chains, track and control direct and indirect spend, and ensure that your organization’s buying is compliant, sustainable, and ethical.
