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Procurement Objectives 2020: It’s Intelligent to Be Early!

Procurement Objectives 2020
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A whitepaper by Gartner titled, “Procurement 2020: Your Action Plan to Prepare Now,” discusses five procurement objectives that are to reshape procurement function by 2020. If you haven’t reviewed the suggestions yet, then it is time you define your procurement objectives now as 2020 is just 11-months away. It’s silly if you are the first to join a celebration party but intelligent if you rank first in procurement.

Procurement Objectives

Present Future
Value Drivers Cost Savings and Risk Mitigation Execution Speed and Business Insight
Procurement’s Role Sourcing Executor Sourcing Advisor
Business Role Procurement Customer Disciplined Sourcing Agent
Delivery Model Standalone Corporate Function Hybrid Center of Excellence (COE)
Resources Execution Staff and Core Technology Professional Advisory Staff and

Customer-Oriented Technology

Table Source: Gartner

Procurement Objective 1: VALUE DRIVERS

First of all, Cost Savings and Risk Mitigation have been the two major value drivers. In 2020, new procurement objectives; Speed of Execution with Business Insight, will replace them. Procurement will adopt technologies for insights into supply market, supplier performance, and business buying behavior.

The shift in this objective from Cost Savings & Mitigation to Execution Speed & Business Insight implies leveraging procurement insight about spends, suppliers, and markets to identify new sources of value generation. Procurement will benefit from a centralized data repository. Due to that, execution accelerates while procurement fulfils its role in supplier relationship and risk management.

Procurement Objective 2: PROCUREMENT’S ROLE

Secondly sourcing executors should transform to sourcing advisors. At present, if an organization’s procurement wing is limited to sourcing as instructed, by 2020 and thereof, the procurement wing will assume full responsibility as sourcing advisory with a focus on top-, mid-, and low-tier buys.

This shift discussed would ensure that the department delivers more high-value work than mere transactional deliverables. This will develop process expertise and skill to train new people. Because of that, a Gartner informs, category managers can focus on the top-tier purchases while developing newer strategies in category management.

Procurement Objective 3: BUSINESS ROLE

The third change in paradigm is that of the role businesses are to play. So far, the procurement function has been a mere customer to fulfill a business requirement. But going forth, this is to be replaced by a newer procurement objective wherein procurement will act as a disciplined sourcing agent to its business partners. This entails greater responsibility in making the right sourcing decision, ownership of consequences, and vendor relationship management.

The objective will expand and implement training capabilities for assisting business partners source better through proper evaluation & monitoring of sourcing.

Procurement Objective 4: DELIVERY MODEL

The fourth procurement objective is a transition; from a standalone corporate function to a hybrid center of excellence wherein the category managers will involve in major purchases while the remaining procurement would provide purchasing assistance to the business.

This new delivery model implies less transactional work and increased business-partner management. This implies a greater focus on process excellence than limiting to category knowledge (current objective) and enforcement of sourcing discipline.

Learn More: e-procurement

Procurement Objective 5: RESOURCES

The final procurement objective for 2020 will be an eclectic mix of most resourceful advisors and world-class technology focused on customer delight. Consequently, organizations need to invest in their human capital and in technology that is smart and intuitive and has the intelligence to query deciding figures from a mine big-data. Certainly, high technology will substantially improve customer’s purchasing experience.

Finally, to onboard human and technology resources, organizations need to prepare a  substantial budget.  Professionals with an analytical skillset will get expensive. Because of that, there maybe an adverse affect on managing headcount. From the technology point of view, artificial intelligence will lead the business along with virtual supply rooms integrated with e-catalogs.

Related Read:

  1. Blog – Procurement Risk Management: A Cognitive Data Driven Approach
  2. Blog – Procurement Process: 7 Steps for Optimal Efficiency and Cost Savings
  3. Zycus e Procurement Software
  4. Research Report – Procurement Benchmarking: Analyzing the Cost of Procurement as a Percentage of Spend
  5. Download White paper – 5 Ways the Oil and Gas Industry can Boost Savings and Profits
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