The consultants at the Hackett Group are back with their annual look at key issues for procurement in 2021.
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Before getting to the top 10 issues for the coming year, based on a survey of procurement executives, Hackett lists four key trends that will have a major influence on procurement decision-making.
Those trends are:
Risk: Hackett sees a major increase in business risks, including supply chain disruption to cybersecurity to regulatory change to the economic implications of prolonged pandemic-related restrictions.
“All parts of the organization, especially procurement, will feel the effects of this high-risk business environment and need to factor this into their 2021 transformation agenda,” Hackett notes.
People: Hackett says the shift to virtual work will require significant reskilling and innovation of management techniques. It will also allow companies will tap into an increasingly global talent pool.
“Performance management will evolve from measuring activity- and task-based productivity to business outcomes based on teamwork and collaboration. Further, diversity and inclusion has become a top priority,” Hackett adds.
Cost: Hackett says that given economic recovery conditions, cost cutting remains the key priority.
“The combination of significant 2020 cost cuts and increased workloads is straining many procurement organizations, and this will continue into 2021,” Hackett says.
Digital Acceleration: Hackett says that the level of “digital maturity” a company possessed was a major factor in their ability to respond to the crisis, creating competitive differentiation. Most companies have learned these lessons and plan to accelerate “enterprise digital transformation.”
“Procurement must support the enterprise digital agenda, while shifting its own digital transformation into overdrive,” Hackett says.
All that as prelude to the 10 procurement issues for the upcoming year, nicely summarized in the graphic below from Hackett.
As it has also done in recent years, Hackett continues to push digitization in procurement.
(See More Below)
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For example, Hackett says that in this year’s study, technology leaders – which it defines as companie that attained greater success overall in implementing process automation, data and analytics, and emerging technologies – were able to address top enterprise and functional objectives far better than their peers.
For example, 44% of technology leaders said they met their functional objectives in 2020, versus just 24% of other companies.
Hackett says the procurement organizations must “Employ smart automation and other emerging technologies to eliminate dependency on manual tasks and improve efficiency.”
Hackett ads that “We anticipate an increase in deployment of portals, data visualization tools and advanced analytics.”
Combined, the report says, these new technologies provide the opportunity for procurement to become much more data and insight-driven.
The result: procurement teams unlock more savings, improve process delivery and enhance the end-user experience.
The full Hackett procurement report is available here: 2021 CPO Agenda
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