5 ways procurement is changing as we enter 2020

December 12, 2019

As both a facet of other industries and as an industry unto itself, procurement is virtually unrecognizable compared to the form it took on January 1, 2000. In the nearly two decades that have elapsed since that date, a myriad of changes have overtaken the procurement industry. This includes the emergence and decline of spot-buy catalogs as an essential procurement device, the obligatory surge of the internet as an essential instrument in virtually every business landscape, and the reliance upon specialized varieties of procurement software that are becoming increasingly more unique as the years pass.

Even as the clock strikes midnight to usher in a brand-new decade on January 1, 2020, it will catch the procurement industry amidst several shifts that we can reliably presume will continue to mature as we turn our sights toward 2030. Although it would be impossible to predict every technological force or innovation that will act upon the procurement industry in the decade to come, here are five ways in which procurement is changing at this very moment, as we enter 2020.

1. Spending is becoming more manageable.

At the onset of the 21st century, there were elements of procurement that organizations either were not interested in addressing, or there were no obvious systems in place for fine-tuning those final slivers on the spending chart. Since that time, there has been an explosion in the number of software solutions devised for the sole purpose of optimizing organizational spending. As 2020 draws near, virtually every fraction of spending has had a specialized software developed for the sake of enabling its optimization. Even tail spend—the smallest 20 percent of spending which accounts for 80 percent of overall vendor interactions—which was once believed to be the final frontier of spend optimization, has highly specialized software devoted solely to its management. As more procurement innovations are made in the coming decade, it is easy to predict the furtherance of spend optimization, and even greater savings being unlocked and repurposed by countless organizations.

2. Automation is becoming everyone’s friend.

Predictably, automation resulted in quite a few workers losing their jobs over the last ten years, and many procurement personnel are unhappy with the thought of automation continuing to encroach upon their industry. However, procurement specialists have less to fear from automation than the employees connected to most other industries. In fact, they actually stand to benefit tremendously as automation assumes responsibility for completing all of the mindless tasks associated with procurement, including data entry.  By freeing up time for procurement workers to focus on other things, automation should empower a multitude of employees to engage in jobs that actually require critical thinking skills, and also any other skills they have acquired over the course of their careers that will permit them to add greater value to their organizations by performing tasks that require greater brain power than simply copying and pasting data.

3. Industry-specific skills are increasing in value.

Speaking of skills, the changes created by the progression of automation in the procurement industry has made complex skills substantially more valuable and rewardable than they have been in prior decades. For example, procurement specialists with formal backgrounds in data analysis and project management will have substantially more to bring to the table when contrasted with peers that are comparatively uncredentialed or unskilled. Obviously, the decision-making practices involved in the utilization of these skill sets mandates the activity of a human mind, and cannot be performed by a machine. Yet, even if you are not a technological wizard, a project tactician, or a data scientist, something as basic as your natural ability to manage relationships and handle negotiations with suppliers will make you an invaluable member of a procurement team.

4. Digitalization is improving decision-making processes.

One of the major catalysts driving the reality of data analysis becoming a critical skill in procurement is the ongoing digitalization movement. Machine learning, the Internet of Things, artificial intelligence and blockchain are all data-dependent and data generators, and all of these tools and systems allow intelligent procurement decisions to be made more rapidly, more strategically, and with a reduced likelihood for error. An ever-increasing number of organizations are opting for cloud-based solutions that deliver up-to-the-minute data in real-time, and even on remote devices. These practices are likely to become universally accepted long before the conclusion of the coming decade, and procurement leaders who readily embrace them should expect to see their careers progress steadily over the next ten years.

5. Sourcing methods and priorities are changing rapidly.

Sourcing is still entrusted with acquiring the necessary goods and services at the lowest possible cost, but the thought processes influencing those decisions are far more multifaceted than they once were. On the one hand, increasingly more procurement departments are being entrusted with securing savings for the sake of funding projects elsewhere in their firms, like market research and product development. On the other hand, procurement teams are also expected to balance the duty of identifying savings with cultivating loyalty with suppliers, collaborating directly with suppliers to develop bespoke service agreements, and looking beneath the surface-level pricing of the moment to deeper logistical considerations that play out over months and years. Critical thinking like this adds new dimensions of interactivity to supplier relationships, and it forces procurement personnel to cultivate creative solutions that satisfy all of their obligations to their organizations.

Perhaps the greatest takeaway from this list is the recognition of the ways technological advancements will level the procurement playing field in some respects by eliminating mundane job duties, thereby maximizing the degree to which collective human knowledge, talent, and individual specialization are capable of benefiting procurement teams. In other words, talented procurement specialists are becoming all the more valuable and simple to identify as a direct result of technological growth. Therefore, workers in the procurement field should avail themselves of any opportunities they have to acquire specialized skills if they wish to make career breakthroughs in the next decade.

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