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Tasked with obtaining the goods and services that organizations require to support their daily operations, procurement departments are most concerned with sustainability, digital transformation, supply chain disruption and the other potential risks that seem to be lurking around every corner in 2022.
A new report from The Hackett Group details the specific risks that procurement is concerned with, and not surprisingly “supply assurance” topped the list of those key challenges. In 2022 Procurement Agenda: Issues to Address and Critical Actions to Succeed, the business advisory firm highlights how disruption continues to come from multiple directions, including the supply chain, inflation, talent and new pandemic outbreaks.
“Managing supply disruption and its impact on revenue remains procurement’s top priority, up from second in the previous year’s study,” the company points out in a press release. “Cost-cutting, traditionally procurement’s number one priority, has slipped to the number two spot. This reflects continued disruptions driven by the global pandemic.”
The Hackett Group says the pandemic has also given suppliers “greater leverage and control in the buying relationship,” and advises procurement departments to adapt to this reality. Additionally, the fallout from Russia’s conflict with Ukraine may further accentuate supply disruption concerns.
“The key to addressing this,” the company advises, “is to build resilience by developing capabilities in supplier relationship management, improving analytics to better identify and predict supply chain challenges, and overall digital transformation.”
Sustainability, Tech & Efficiency
Right now, procurement professionals are also focusing their efforts, energy and attention on:
- Sustainability. While managing continuing supply disruption and its impact on revenue remain procurement’s top concerns, The Hackett Group says sustainability rose more than any other priority on the function’s 2022 agenda, compared to the previous year. “Together, these priorities reflect a continuing elevation and broadening of the function’s role and value contribution beyond only delivering cost savings,” it explains.
- Technology. Digital transformation remains a front-and-center enabler, the company points out, and also includes increased rigor around data management; the need to deliver up-to-date insights to inform supply risk, sourcing and supplier management; and greater realization of the importance of obtaining value from technology investments. “Historical projections around growth in adoption haven’t fully come to fruition, and predictions for 2022 adoption are somewhat tempered,” The Hackett Group states in its reports. “However, procurement executives are concerned about their ability to deliver on digital transformation, as well as certain enablers of it.”
- Doing more with less. Executives remain concerned about maintaining an efficient, productive workforce with the evolving skills needed to meet the broader enterprise mandate. Developing capabilities in areas such as supplier relationship management, sustainability and data-driven insights will be critical to enabling business success, The Hackett Group predicts. “Functional leaders must find a way to do so while also navigating disruption due to resignations and normalization of the work-from-anywhere model.”
Top Procurement Priorities
In its report, The Hackett Group ranks the top 10 objectives that procurement executives are focused on right now. Some of the key concerns include reducing supply risk in order to ensure supply continuity, reducing spend cost, acting as a strategic advisor to the business and enabling corporate sustainability. The expectations and demands of procurement’s stakeholders (e.g., employees, customers, governments) around supplier sustainability have elevated the latter more than any other on procurement’s agenda—from No. 8 in 2021 to No. 4 in 2022, the company reports.
Procurement is also working to align its skills and talent pool to meet changing business requirements. The Hackett Group says the Great Resignation has exacerbated this need, and that the modern vision of procurement requires “strengthening skills and competencies, whether to improve stakeholder engagement, meet raised business expectations, or develop new capabilities in areas like sustainability, supply risk and data intelligence.”
This year, five of procurement’s top 10 priorities are deemed “critical development areas,” with high importance but low confidence in procurement’s ability to meet business expectations, the company reports. These priorities are: enable corporate sustainability; accelerate digital transformation; improve analytical, modeling and reporting capabilities; align skills and talent with changing business needs; and improve procurement agility. “If procurement cannot overcome challenges in these areas,” The Hackett Group asserts, “it may be difficult to address critical priorities such as [meeting] supply risk objectives.”
