Entering a new decade, Procurement faces a host of new challenges, obstacles, and strategic opportunities. Things have gotten so hectic for Procurement and Supply Chain that the very definition of "complexity" has grown more complex. Mastering complexity doesn't just mean overcoming one challenge. Rather, it means assessing and addressing a number of challenges both within the organization and across its supply chain.
Deloitte's latest CPO Survey suggests that "complexity" is perhaps the one word that defines Procurement's current situation. They identify four kinds of complexity that each organization will need to address in 2020 and beyond.
The 4 Kinds of Complexity
External Complexity: Mastering external complexity means addressing everything "outside the four walls of the organization" that Procurement has to interact with. 2018 and 2019 saw a number of new external risk factors emerge begin to exert pressure. These include the ongoing trade war between China and the United States as well as the misgivings associated with a potential recession. To mitigate external risks, Procurement needs to develop contingency plans and identify opportunities to restructure the supply chain.
Internal Complexity: These challenges have to do with the relationships between different business units and their priorities. For most of the last decade, Procurement's primary internal challenge was securing buy-in from its peers. The function has been mostly successful. Within most organizations, Procurement is regarded as an effective, valued business partner. Few organizations, however, rate Procurement as an "excellent" partner. According to Deloitte, just 26% of organizations would offer such high praise. CPOs can begin to close this gap by automating tactical processes and freeing Procurement's time to focus on alignment and enablement.
Talent Complexity: Talent is another area that has challenged Procurement throughout the last decade. Just a fraction of CPOs believe their teams have the skills necessary to deliver on their objectives (let alone organization-wide objectives), but training budgets remain tiny. It's not enough for Procurement to ramp up these investments and hope for the best. The function needs to ensure it aligns its recruitment, on-boarding, and long-term talent management processes to best serve the organization's broader goals. It's also important to start casting a wider net. After all, the definition of Procurement excellence is changing.
Digital Complexity: It's been a digital decade for Procurement. Nearly half of Procurement teams are already partnering with IT to align on objectives and the function fully intends to realize a digital transformation sooner rather than later. Unfortunately, most organizations' hopes are still vastly outweighing their actual capabilities. A majority of businesses hope to make digital skills a priority during the new decade. As with talent, it's crucial for Procurement to align its digital strategy to support organization-wide goals and serve the entire business.
Whatever "complexity" has meant for your organization in the past, count on new kinds of complexity to emerge in the new decade. Are you ready to evolve alongside external, internal, talent, and digital risk factors?
Procurement's Decade Ahead
Check out the rest of our series on the trends and topics that will define Procurement in 2020 and throughout the next decade: