Strategies to Future-proof Procurement: Are You...
Transcript of Strategies to Future-proof Procurement: Are You...
NETWORK LOCALLY,IMPLEMENT GLOBALLY
Ariba, an SAP Company
Michael KochDirector - Solutions Marketing Ariba, an SAP Company
Strategies to Future-proof Procurement: Are You Ready?
Building on a strong foundation Outsourcing explodes
Strategy scope widens
Talent competition heats up
Innovation comes from without
Suppliers gain power
Going boldly where no procurement study has gone before
How have executives responded to the trends outlined in Vision 2020 in the years since?
What new challenges and opportunities do executives and practitioners consider most important?
Where are there gaps in understanding between executives and practitioners?
A global survey of executives and practitionersIn collaboration with SAP, Oxford Economics is conducting a large-scale global study to discover emerging and enduring trends in the procurement function. We surveyed 500 procurement executives and 500 procurement employees in the following countries:
AustraliaAustriaBrazil
CanadaChina
DenmarkFinlandFrance
Germany
IndiaItaly
JapanMexico
NetherlandsSpain
SwitzerlandUKUS
Key findings From here to where? Changes in the procurement function drive sharply different views of what the
future will look like.
Procurement gets collaborative. Executives and practitioners are spending more time collaborating with other lines of business and external partners.
Goodbye to business as usual. These new ways of working are forcing change on the way procurement operates—and on the way success is measured.
The technology agenda. Procurement today is focused on automation and collaboration though social platforms—but executives and practitioners do not see eye to eye on every issue.
The human challenge. As the nature of work changes and technology advances faster than most workers can keep up, attracting and recruiting the right workers is a challenge for the procurement function.
32%
33%
30%
32%
27%
35%
30%
38%
44%
26%
27%
28%
29%
32%
34%
35%
44%
46%
Geopolitical issuesBig Data
RegulationCloud computing
Talent/Skills shortagesMobile technologyBusiness networksCommodity pricing
GlobalizationExecutives Practitioners
Macro concerns still dominate
Which economic and technology trends do you expect to have the most significant
impact on the procurement function over the next three
years? Choose top 3.
Procurement operates across functional boundariesPractitioners say, at their company…
Agree /Strongly agree
Procurement is becoming embedded in other parts of the organization.
59%
Procurement is playing a more strategic role in the organization.
63%
Internal collaboration is a given
70% Procurement is becoming
more collaborative with other parts of the business.
65% Procurement data is being used strategically by other
parts of the business.
Agree /Strongly agree
Practitioners say, at their company…
Reaching beyond the firewallOn which of the following areas
would you like your organization to be most focused today?
Executives say…
Choose up to 3.
41%38% 35% 35%
31% 30% 29%26%
46%
34% 35%
42%
31%37%
30% 30%
Working one-on-one with
suppliers in astrategic way
Managingsupply risk
Optimizing theprocure-to-pay
process
Implementingand training onnew technology
Working onsustainability
and CSRinitiatives
Conductingcategory
managementand sourcing
Working withlines of
business onnew initiatives
Analyzingspend
Today In two years
The cost of collaboration is timeThinking of a typical day at work, which of the following activities take up the majority
of your time?
Practitioners say…
Choose up to 3.
55% 55%46%
41%36%
32% 32%
Working one-on-onewith suppliers on
strategic initiatives
Working one-on-onewith suppliers and
others onadministrative issues
Conducting sourcing/contracting category-
management activities
Working on operationalprocure-to-pay tasks
Training/Upskillingprograms
Recruitment of newtalent
Conducting spendanalysis activities
It’s all about relationships
To what extent are the
following trends
affecting the way your
procurement function
operates?
To quite an extent/To a great extent
47%
48%
54%
48%
53%
56%
55%
46%
48%
50%
53%
54%
58%
61%
The use of contingent workers within theprocurement function
The use of contingent workers across thebusiness
Suppliers providing more end-to-endsolutions, instead of just materials or…
An increase in services purchasing,including statement-of-work contracts
Procurement managing accounts payable
Increased competition for high-performingsuppliers
Procurement owning the supplierrelationship
Executives Practitioners
Cost savings are table stakes
EXECUTIVES PRACTITIONERS
1
2
3
1
2
3
Cost savings and cost avoidance (70%)
Supplier quality/ performance (49%)
Inventory turnover/ inventory activity (49%)
Cost savings and cost avoidance (58%)
Supplier quality/ performance (51%)
Procurement ROI (50%)
Which of the following KPIs
does your organization
use to measure procurement's
success?Top 3
responses
65%
54% 53% 52% 52% 50% 49% 48% 48% 46% 45% 45%
Cost savingsand cost
avoidance
Number orpercent oftouchless
transactions
Inventoryturnover/inventoryactivity
Riskmitigation
Order cycletime
Number ofsuppliers with
automatedcollaboration
ProcurementROI
Percent oftotal spend
undermanagement
Impact onrevenue from
innovation
Supplierquality/
performance
Percent ofcompliant
purchasing
Stakeholdersatisfaction
results
A disconnect between usage and value
Executives say…
Only respondents who say their company used a particular KPIs were asked to rate its value.
How valuable are the following KPIs?
Practitioners measure themselves on cost
80%Cost savings/
cost avoidance
52%Supplier quality/
supplier performance
49%Procurement
ROI
47%Percent of total spend under management
45%Inventory turnover/ Inventory activity
Which of these corporate-level KPIs do you feel you contribute to the most in your day-to-day job?
Top 6 responses
Choose up to 3 or none of the above.
Practitioners say…
49%Percent of compliant
purchasing
The tech imperative
Which economic and technology trends do you
expect to have the most significant impact on the procurement
function over the next three years?
Choose top 3. Ranks listed here from the technology-related responses
EXECUTIVES PRACTITIONERS
2
1 1
2
3
Business networks
Mobile technology
Cloud computing
Mobile technology
Big data
Cloud computing3
Collaboration technologies drive the business
B2B commerce networks
Social media
58% 48%
Internet of Things
52% 46%
Mobile apps and devices
49% 42%
Analytics
46% 47%
Cloud
45% 43%
Knowledge exchange/ collaboration platforms
54% 57%
44% 47%
How important are the
following technologies important to
the progress of your
procurement organization?
Quite important/Very important
Automation today…To what extent are you automating the
following processes today?
Mostly automated/Completely automated
66%
53% 50% 50% 49% 49% 48% 47% 47% 47% 44%
65%
52% 55%51% 48% 50%
55%48% 48% 49% 51%
Spendanalysis
Strategicsourcing
Contingentworkforce
management
Operationalprocurement
Invoicemanagement
Contractmanagement
Supplierperformancemanagement
Procurementperformance
analytics
Supplier riskmanagement
Servicesprocurement
Transactionalcollaborationwith suppliers
Executives Practitioners
…uncertainty tomorrowTo what extent will you be automating the
following process in two years?
Mostly automated/Completely automated
76%69% 68% 66%
70% 68% 66% 67%63%
56%64%
70%
60% 63% 61%56% 57%
63%56% 55% 57% 58%
Spendanalysis
Strategicsourcing
Contingentworkforce
management
Operationalprocurement
Invoicemanagement
Contractmanagement
Supplierperformancemanagement
Procurementperformance
analytics
Supplier riskmanagement
Servicesprocurement
Transactionalcollaborationwith suppliers
Executives Practitioners
People are a priority
Executive investment priorities
1 – Recruiting new talent 2 – Training/Upskilling programs3 – Procurement/Supply chain
technology4 – Outsourcing5 – Funding supplier innovation
programs6 – Hiring consultants7 – Acquiring third-party data
Executives and practitioners alike say recruiting new talent and investing in
training/upskilling are the top investment priorities.
48% of executives and practitioners
say the use of contingent workers is changing the way
procurement operates.
Business skills most difficult to acquireExecutives say…
How difficult is it to find and recruit talent with the following skills to meet the
changing demands on the procurement function?
24%
Supply chainmanagement knowledge
24%
Risk management
24%
Data analysis and critical
thinking
20%
Soft/People skills
28%
Negotiation
34%
Strategy/ Business acumen
28%
Technology
Difficult/Very difficult
Luring workers to the procurement function
Promoting procurement as a training ground for
other functions
23%
Defining clear career paths within
procurement/supply chain
21%
Recruiting out of business/graduate
programs
17%
Offering competitive
compensation
24%
Recruiting out of college
16%
Executives say…
Most important strategy
Practitioners are recruited early
I wanted to use procurement as a training ground for another area of the
business.
29%
Procurement offered me a
defined career path.
43%
I was recruited out of business
school/a graduate program.
55%
I was offered competitive
compensation.
52%
I was recruited out of college.
44%
Practitioners say…
Choose all that apply.
Job satisfaction is high
They plan to stay in the procurement function for the long term.
They are satisfied or very satisfied with their jobs.
Procurement is a training ground for employees moving to other areas of the business.
Practitioners say…
56%
54%
40%
Surprises in the data?
The flexible workforce is having an impact on the way procurement works. Nearly half (48%) of executives say the use of non-payroll workers across the business is changing the way procurement operates. Procurement is also increasingly automating contingent workforce management, pointing to its growing importance.
Social collaboration powers procurement. 58% of executives and 48% of practitioners cite social media as important to the progress of their organization.
Working with other lines of business ranks low on executives’ list of priorities for their employees. Just 29% list it among the top three areas of focus for practitioners.