Taking on new technologies, capabilities and priorities in procurement departments will largely transform these teams over the next few years. The current digital age represents a significant change from the way business was conducted even a few years ago, and firms that fully embrace new points of view may be better able to cope with the new reality than their competitors. While evolution is necessary, it can also be nerve-wracking for officials within the supply chain. The decisions they make today may set their course for years to come.
Deciding what to change and how will be essential, with firms needing a list of actionable and clearly delineated changes that address real-world issues they're facing. With clear priorities and a dose of market research, leaders can set their agendas. The supply chain of tomorrow will emerge as organizations across industries and regions executive their respective strategies and revolutionize the way they procure goods and services.
Four areas of attention
According to the Hackett Group's 2018 industry survey, there are four distinct functional areas that executives should target for improvement in the near future. First, leaders should ensure their teams are stocked with relevant skills and knowledge as requirements change across the sector. They should also find ways to determine the value of their departments in real business terms that the rest of the company will be able to understand. It's important for procurement departments to embrace supplier relationship management to optimize their contracts. Finally, they should embrace category management.
The set of priorities identified by Hackett is so vital because the net effect of the changes within could involve a transformation of the supply chain's overall role. Procurement departments that are more concerned with delivering value to the whole organization and aligning with overall goals may find their importance snowballing in the years ahead. Corporate managers that work more closely with their logistics teams may find a positive cycle emerging - greater decision-making power and integration with business operations go hand in hand.
Another survey of chief procurement officers, this one by Deloitte, found there is a gap between the ways these departments want to contribute to organizational performance and their current abilities. As of the study, 24 percent of CPOs see their teams as valued partners of executives, with a strategic role and proven track record of value. Many more, 86 percent, want to take on this kind of role in the future. This shows the path supply chain groups will work over the next few years, even as plenty of work remains to get there.
When the C-suite is on board with procurement's agenda and operations, the relationship between logistics and overall operations tends to thrive. This is a bond employees will likely focus heavily on building in the future. There is a need for improvement, with Deloitte noting that the amount of supply chain leaders who feel supported by their companies' executives actually declined between the 2016 and 2017 results. With a clear agenda ahead of them, managers can take on this relevant strategic challenge.