Today, the procurement function is at an inflection point. After a challenging year spent proving their teams’ importance, CPOs now have a seat at the table when it comes to business-imperative decision-making. But keeping that seat isn’t guaranteed, and procurement professionals have set their 2021 priorities with this uncertainty in mind.
In Fairmarkit’s first webinar of the year, we asked industry luminaries and our audience of procurement professionals about their priorities for the coming year. We heard about a host of transformations, challenges and innovations on the agenda. According to a straw poll of procurement professionals conducted during the webinar:
- 84% of CPOs said they’re prioritizing stakeholder alignment
- 83% said they’re focusing on talent management
- 54% are making tail spend a priority.
Here’s a roundup of some of the top procurement priorities for 2021.
Prioritizing stakeholder relationships
From lockdowns to Zoom meetings, social distancing to working from home… the pandemic has changed business for the foreseeable future. Gone are handshakes and happy hours, site visits and trade fairs. With the new playing field comes new challenges. It’s harder to build relationships with colleagues when everyone’s working from afar. So, it’s little wonder that many CPOs are now turning their attention to rebuilding stakeholder relationships in 2021.
The pandemic also highlighted the importance of improving relationships with external stakeholders. As work stoppages and logistical disruptions brought supply chains to their knees, building trust with suppliers became imperative. That work will continue.
In 2021, prioritizing stakeholder relationships means building on lessons learned in 2020, including finding new and innovative ways to improve trust and understanding. To do this successfully will take time, effort and purposeful communication.
Addressing tail spend
For many companies, tail spend management has never been a priority. And that’s understandable. Tail spend is easy to ignore when you’re dealing with bigger issues—like a pandemic. When strategic purchases require your attention or other priorities loom large, tail spend is easy to ignore. Comprised of the myriad spot-buys and indirect purchases that fall outside of procurement’s influence, tail spend can also be incredibly hard to identify and measure without the right tools.
But in a world where most direct-spend categories have already been mined for efficiencies, many procurement teams are finally realizing that tail spend could be the single biggest source of savings for their organization. Curtailing tail spend can lead to dramatic improvements in cost savings, supplier base reduction, and all-around user experience for internal stakeholders.
Turning to talent
Investing in people is high up on most procurement radars this year. Whether it be hiring new staff or training existing team members, improving the skills and expertise of the team has become a high priority.
New skills are needed to excel at the procurement game. Twenty years ago, the business was very transactional—negotiating deals, purchasing items and processing invoices. But today’s procurement professionals must provide higher returns on investment and innovative solutions to core business problems. They need to be able to analyze data, develop relationships with diverse suppliers, understand sustainability, and develop risk mitigation techniques. These new demands require new skills, including soft skills, technical prowess, analytical skills and business acumen. Procurement teams now need to be multifaceted, comprised of individuals with complementary skill sets. Finding and keeping good talent has become a true challenge and a top priority for many CPOs.
The focus in 2021 for procurement teams will also include managing digital transformations, implementing sustainability programs, and improving supplier diversity.
Some companies are prioritizing their tech investment—setting up performance metrics or utilizing machine learning and artificial intelligence in their processes. They’re integrating their procurement systems with their company’s ERP and automating their workflows.
Sustainability and supplier diversity have become major board initiatives for most companies—and the procurement team has been tasked to lead the way. Not only is sustainability and diversity good for the planet and society, but these two business practices have been proven to help businesses de-risk their supply chain and improve the robustness of their supplier roster.
Prioritization is always a balancing act—judging every activity in terms of effort to be expended versus potential gains to be made. These days we’re all strapped for time, so it’s important to choose carefully where to devote your attention. Whatever your focus, make sure it will move the needle and add value to the business.
For a deeper dive into procurement’s top priorities for 2021—and to see our new game show based on The Price is Right—watch our latest webinar here.
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