As digital innovations drive key industry changes, chief procurement officers (CPOs) see their organizations playing bigger and bigger roles in company digital strategies, according to Deloitte’s “Global Chief Procurement Officer Survey 2017.” In fact, 75 percent of respondents said procurement’s role “in delivering digital strategy will increase in the future.”
There’s just one problem: While nearly 90 percent of CPOs said talent “is the single greatest factor in driving procurement performance,” more than 60 percent also said their teams “lack the skills needed to deliver their procurement strategies.”
Procurement’s Role in Digital Strategy
Before diving into procurement’s talent woes, it may be helpful to understand exactly what role procurement can play in organizations’ digital strategies.
“The are two angles to this,” says Ryan Flynn, principal at Deloitte Consulting LLP.
The first is that the digital capabilities companies require often come from external suppliers. Procurement organizations will be key to navigating relationships with these suppliers.
“As companies look to start to execute on their digital strategies, procurement will play a role as the gatekeeper for supplier relationships, as well as the gatekeeper for what sourcing strategies should be around a particular area,” Flynn says. “They will play a role of helping to shape the strategy and providing input on who some of the leading suppliers might be in different spaces, be it blockchain, smartglasses, or any other types of digital technology coming to the fore now.”
The second angle regards how digital strategy will apply to procurement itself.
“As procurement looks toward not only helping [the overall organization] but also improving its own operations, it will have to consider what the company’s digital strategy means for procurement itself and what kind of digital technologies it should be adopting,” Flynn says.
Going forward, the most successful procurement organizations will be those that “play both sides” of the matter, according to Flynn. Procurement organizations will have to understand both how to support the company’s overall digital strategy and how digital strategy will impact them.
Talent Drives Procurement Performance – But Most Organizations Don’t Have It
CPOs expect their teams to play crucial roles in digital strategy, but the survey found “62 percent of respondents noted there is still a large to moderate skills gap across analytical abilities.”
This isn’t exactly news to Flynn, but that doesn’t mean it isn’t a problem.
“This continues to be an issue for procurement,” he says. “It comes up every year … and it’s something they need to figure out.
Procurement organizations need to do more than simply secure lower prices from suppliers; they need to help companies find a variety of ways to save costs, and that can only be achieved when the team has a healthy grasp on analytics.
“In order to get beyond the initial focus on just getting lower prices – in order to get savings beyond that – you really need to go in and do some heavy data mining and heavy analytics,” Flynn says.
Unfortunately, analytics are precisely the skill many CPOs say their talent lacks. The problem is only compounded by the fact that procurement datasets tend to be pretty tricky.
“Companies don’t necessarily have access to good, clean data – particularly spend data – that can then be analyzed to provide insights for sourcing,” Flynn says. “Often times, you’re cobbling together data from multiple sources and formats, so you have duplicate data, data that is not necessarily complete. It’s hard to make heads or tails of it.”
Training could be a potential solution, but less than a third of the CPOs surveyed by Deloitte said they provided training to employees. This, too, is a trend Flynn has seen regularly over the years: Training budgets are shrinking, both within procurement organizations and outside of them.
“I think it’s going to be a real challenge moving forward,” Flynn says. “On the one hand, the procurement executives are saying they don’t have the right team with the right skills to execute on the strategy; on the other hand, they have these relatively low and shrinking training budgets. Something has to give there.”
Closing the Procurement Talent Gap Through Tech, Training, and Other Means
Even if training budgets are too meager to cover all the education talent needs, there may be ways to get around the problem and deliver training regardless.
“It will be interesting to see if there is a possible way for procurement to piggyback on digital training that might be going on in the broader organization,” Flynn says. “If organizations themselves are thinking about how to build digital strategies, how to execute on them, and how to educate people, there could be a possible way for procurement to piggyback on some of that.”
Another option Flynn has seen in action: Procurement organizations partnering with local schools to develop curricula regarding supply chains and procurement. That way, organizations could foster the talent they need now while helping to close future skills gaps that could have arisen down the line.
“The next generation of talent needs to be there,” Flynn says, “If procurement organizations don’t do enough to build that talent and think about the skills they need to have, they’re going to find it harder and harder to be successful in generating savings and value for their companies.”
The influx of millennials into the workforce might also be a boon for skills-strapped procurement organizations.
“Millennials ‘out of the box’ are probably a little more equipped and geared toward digital technologies, using them, and thinking about how they might apply in different ways,” Flynn says. “I think there’s an opportunity to leverage some of those resources and put some of those folks in roles where they might have some responsibility around digital strategy, given the background and the skills they bring to this area.”
Flynn also believes that crowdsourcing analytics work to teams of contractors might be a viable option for some procurement organizations. Plus, the technology driving digital strategies may itself be able to handle some of the analytics load.
“You’re always going to have some level of reliance on humans to do the types of analysis you might want to do, but there is an opportunity for some of that analysis moving forward to be done more through technology,” Flynn says, “We are seeing more and more digital technologies, like cognitive spend analytics, that use things like machine learning and pull data from multiple different data sets to provide a much better baseline for the analytics than you might have been able to get otherwise.”
Regardless of how procurement organizations choose to address their talent woes, what matters is that they solve their problems.
“It is of the utmost importance that procurement organizations really tackle this issue,” Flynn says. Otherwise, it will only get worse. Both procurement organizations themselves, as well as the overarching digital strategies of companies, stand to suffer if that happens.
But the future is by no means bleak. By combining smart talent strategies with digital technologies, CPOs can find innovative ways to fill their talent gaps.