Procurement Agenda 2024: Key Issues - Root cause - Framework for improvement
As we look ahead to 2024, procurement professionals must remain vigilant, adaptive and strategic.
This year is coming out to be all about - How will you do more with less? With such pressures, right frameworks are a must! But according to a survey done by Competitors View almost 76% procurement leaders said they lacked the structure to procurement transformation both at micro and macro level!
Delve into some key issue that sits on top of procurement leaders mind this year get a glimpse into some basic frameworks based on scientific evidence to understand their root causes and actionable solutions.
1. Spend Cost Reduction
Root Cause Analysis:
Lack of comprehensive market research leading to suboptimal negotiation positions.
Inadequate visibility into departmental financial needs resulting in inefficient resource allocation.
Misalignment of daily operations with overarching strategic goals leading to redundant expenditures.
Insufficient risk detection and management capabilities leading to unexpected costs.
Framework for Improvement:
Conduct thorough market research leveraging data analytics and market intelligence tools to negotiate favorable terms.
Implement robust financial tracking systems to ensure alignment of spending with strategic objectives.
Establish cross-functional collaboration mechanisms to align daily operations with overarching strategies.
Integrate risk management protocols into procurement processes to mitigate potential cost escalations.
2. Ensure Supply Continuity
Root Cause Analysis:
Limited capabilities in supplier relationship management and third-party risk assessment.
Inadequate focus on developing critical capabilities for ensuring supply continuity.
Low confidence in the maturity of supply chain risk management practices.
Framework for Improvement:
Prioritize investments in supplier relationship management and third-party risk assessment capabilities.
Develop comprehensive strategies to address critical gaps in ensuring supply continuity.
Implement proactive risk management frameworks to enhance confidence in supply chain resilience.
3. Act as a Strategic Advisor
Root Cause Analysis:
Increasing expectations from business stakeholders for procurement support in strategic areas.
Lack of perceived influence and trust, hindering procurement's advisory role.
Insufficient focus on developing business partnering capabilities.
Framework for Improvement:
Cultivate strategic partnerships with business stakeholders to understand and address their needs effectively.
Enhance procurement's influence and credibility through proactive engagement and value-driven initiatives.
Invest in developing business partnering skills and capabilities within the procurement team.
4. Pursue Procurement Digital Transformation
Root Cause Analysis:
Incomplete adoption of supporting and emerging technologies within procurement processes.
Lagging growth projections for technology adoption, particularly in supplier performance and management solutions.
Framework for Improvement:
Prioritize the adoption of supporting and emerging technologies to enhance procurement efficiency and effectiveness.
Set ambitious growth targets for technology adoption, focusing on areas such as supplier performance management.
Continuously evaluate and upgrade technology solutions to meet evolving procurement needs.
5. Address the Skill Shortage
Root Cause Analysis:
Widening gaps between existing procurement skills and future requirements.
Lack of talent development initiatives to bridge skill gaps and prepare for future challenges.
Framework for Improvement:
Implement comprehensive talent development programs to upskill existing procurement professionals.
Establish recruitment strategies to attract and retain skilled professionals aligned with future procurement needs.
Foster a culture of continuous learning and development to ensure the procurement team remains adaptable and resilient.