Change

Evolution or irrelevance: Procurement is at a crossroads

PL Staff

Faced with the automation of its traditional tasks, procurement must seek new opportunities to add value – or risk fading into irrelevancy. Elevating the function’s capabilities is vital to its continuing advancement

Sourcing. Requisition approvals. Negotiations. Invoice processing. Contract management. All of these tasks, which have long been the bedrock of procurement, are undergoing a dramatic revolution.

Where these activities once required painstaking human input, they are increasingly entering the domain of machines as a growing suite of tools arises to automate these processes, dramatically reducing the labour required to complete them.

While eliminating the sometimes tedious administrative work accompanies these tasks has long been an objective of strategically minded leaders, the automation revolution ultimately poses a new challenge for procurement: What is its purpose?

Fortunately, fresh priorities provide an opportunity to make the case that far from being automated out of importance, the function is more strategically important than ever.

The Covid-19 pandemic and its shortage-afflicted, inflationary tail, have exposed the fragility of many organisations’ supply chains, underscoring the need for deeper and more engaged relationships across several tiers and the importance of agility in responding as threats emerge. With the threat of climate change and flaring geopolitical tensions reaching an inflection point, ensuring the resilience of supply chains will remain high on businesses’ agendas for many years to come.

Meanwhile, consumers, investors and governments are taking a closer look at the impact organisations are having on the communities and environments in which they operate. As custodians of the supply chain, procurement teams have an important role to play in holding suppliers to account for their impact on CO2 emissions, rooting out bad employment practices and using their spending as a tool to support the development of diverse-owned business.

Progressive functions also see an opportunity to further help their internal stakeholders deliver on their objectives. From providing deep, data-driven insight into the supply market to support decision-making, to scouting and implementing innovative solutions, there are many ways the function can act as a trusted partner to the wider business.

All these factors provide avenues for CPOs to push their teams beyond traditional procurement activities and position their teams as strategically vital enablers, not back-office functions populated mainly by machines.

To take advantage of these opportunities, procurement needs new capabilities – developing internal staff and finding new talent with future-fit skills, broadening the scope of its activities, overhauling its processes and operating structures, and making the most of new technologies.

Read more about the call for new capabilities in procurement and where CPOs are prioritising investment in the 2022 CPO Compass research.

 

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