In a world where we’re all being asked to do more with less, electronics buyers are under pressure to make big contributions to their organizations while working with fewer resources, less money, and a limited number of hours in the day. As most buyers will attest, workloads have increased over the last few years, but staff numbers and the related support structures just haven’t kept up.
Budgets are also an issue. In a new report, The Hackett Report says that procurement expects its budget to grow at a much slower pace this year than in 2018 (1.3%, vs. 2.7% last year). Procurement staffing shows a similar trend, with 0.9% growth expected vs. 2.8% in 2018.
“With revenue growth expected to increase from 5% in 2018 to 5.7% for 2019,” the group reports, “this creates significant productivity and efficiency gaps that procurement organizations must overcome.”
4 Ways to Adapt to the “New Normal”
Working with constrained resources is never fun, but there are ways that buyers can adapt to this “new normal.” When deployed and used effectively, for example, technology can be a great enabler of productivity. Add automated solutions to the equation and procurement can free itself up to focus on the most important tasks—and all without the need for more hands on deck.
Here are four ways procurement can do more with less in 2019:
- Get your priorities in order first. When they’re putting out daily fires and tackling the problems that are standing right in front of them, electronics buyers don’t always have the chance to step back and prioritize their actions. As a result, investments in new technology and the introduction of new processes don’t always live up to expectations (and, wind up unused and worthless as a result). “Despite the fact that procurement knows what it needs to do, it’s simply not fully translating into an effective plan of action,” The Hackett Group’s Chris Sawchuk points out. “Procurement must become fully dedicated to advancing its capabilities in analytics, customer-centricity, agility, and more, while also investing in the right talent to help lead those changes.”
- Look at technology as the ultimate enabler. “Digital transformation is making it easier for procurement organizations to do more with less,” The Hackett Group states in its report. In fact, 30% to 40% of buyers say that digital transformation has a “high impact in achieving enterprise objectives, enhancing performance, optimizing the service delivery model, and addressing roles, skills profiles, and needs.” And, over the next two to three years, procurement organizations expect the impact of digital transformation to dramatically increase, with key areas like robotic process automation and advanced analytics seeing particularly high adoption growth rates (2.3 times and 60%, respectively). “Broad adoption of e-procurement technologies is also expected to grow by nearly 2 times,” the organization notes.
- Adopt procurement-centric digital tools. According to The Hackett Group, procurement has “aggressive plans” to roll out more digital tools and procurement-specific technologies over the next two years. Good options include cloud-based business applications along with data management technologies like data visualization (where The Hackett Group says adoption rates will rise by 24%), master data management (57% adoption growth), and advanced analytics (60%). “Procurement-specific technologies are expected to become far more broadly adopted over the next two years,” it reports, “with nearly universal adoption of e-procurement, spend optimization analytics, and supplier relationship management systems, and just slightly lower adoption rates for e-invoicing and contract lifecycle management.”
- Improve your agility. Agility is an important factor in all areas of business, a direct reflection of the changing market and technology advancements. For procurement, this means faster decision-making enabled by efficient technologies and adaptive staff who possess a variety of skills and competencies. To improve procurement function agility, The Hackett Group says procurement should:
- Apply design thinking to processes to develop customized services and deliver useful information to their customers.
- Leverage new technologies (e.g., robotics process automation) to reduce response time by eliminating manual processes.
- Modernize core systems that can assist in delivering timely insights drawn from both complex data modeling and predictive analysis.
“Agility is critical if procurement is to be able to respond to market changes,” The Hackett Group’s Laura Gibbons concludes. “Without a focus on customer-centricity, procurement can miss significant opportunities for improving efficiency, simply because they don’t effectively know what the business needs. And without supplier relationship management, opportunities for innovation can be missed.”
