March 18, 2016 | Procurement Process and Excellence
As per a recent research report from the Hackett Group, Inc., “Procurement Key Issues,” procurement leaders expect operating budgets and staffing to increase slightly in 2016. The increase is foreseen as an outcome of cost reduction efforts along with simultaneous attempts to be better strategic business partners.
Traditional cost reduction strategies are witnessing a comeback on account of the high business uncertainties and risks. In 2016, the key procurement strategy areas will be: becoming a better strategic partner to the business; increasing spend influence; improving agility; and tapping supplier innovation.
To identify new sources of savings, the research report recommends examination of the tail spend which accounts for almost 20 percent of spend distributed across 80 percent suppliers. The Hackett group reveals that most procurement organizations tend to not focus heavily on tail spend. Hence, it is estimated that a less mature procurement organization can easily save up 3 – 5 percent of spend by examining its tail spend.
As the role of procurement matures from transactional facilitator to trusted business advisor, proficiency with the next generation of analytics like big data will play the role of a key enabler. The research mentions that to close capability gaps, procurement will look for better ways to harness big data and successfully integrate the next generation of workers into their teams. However, sophisticated analytical tools and methods can be optimally utilized when used by resources with appropriate skills.
To support the enterprise agenda, procurement organizations must continue to enhance their own efficiency, upgrade their talent, become more agile, and ensure that their strategy is aligned to the business goal.