The Evolving State of Procurement Culture, Identity, and Technology

1/14/20

Image by Gerd Altmann from Pixabay

Research and advisory firm Levvel Research shared key findings around the evolving state of procurement culture, identity and technology in their 2019 Procurement Insight Report.

Read more in the APICS Greater Detroit blog below.

APICS Greater Detroit proudly serves the local Supply Chain community by providing education and information needed to stay competitive in today's fast changing world.

APICS defines procurement as including the business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.

Procurement is a critical role within most companies, often operating as a strategic arm within a tactical back office. Per Levvel Research, "Many procurement departments see themselves as crucial to ensuring financial stability for their company by maintaining competitive and controlled purchasing, strong supplier relationships, and low maverick spend. "

In their 2019 research study, Levvel shared that while maverick spend is the most likely initiative to be reported as a critical priority, broader goals related to global business operations (including supply chain visibility and sustainability/ethical processes), risk management, and leveraging new technology are listed as critical or moderate priorities for many organizations.

Below are the top four procurement initiatives based on survey respondents.

  1. Reduce maverick spending (e.g. fraudulent, off-contract, off-budget, non-compliant purchasing). Responses: 38% critical and 40% moderate.
  2. Improve visibility/collaboration into supply chain processes. Responses: 35% critical and 42% moderate.
  3. Improve visibility into supplier data, quality, and/or risk. Responses: 34% critical and 47% moderate.
  4. Leverage new technologies, such as AI and big data/analytics. Responses 33% critical and 42% moderate.

Levell also shared these three notable trends based on their research:

  1. Procurement functions have shifted from basic supply management and overseeing transactional activity to more holistic and expansive participation within the business. Procurement leaders’ goals are evolving from simply controlling spend to strategically executing procurement functions that support the business’s financial and operational decisions, protect its bottom line, and mitigate risk to the company’s competitive advantage. This shift is largely motivated by supply chains that are increasingly international, competitive markets operating under more volatile economic conditions and trade laws, and the relatively sharper focus on sustainability and ethical sourcing in order to maintain brand and legal security.
  2. The procurement technology space is becoming much more diverse and innovative. eProcurement technology providers are offering tools that enable more strategy, risk control, and supply-chain-centric management to align with the shifting values of procurement leaders. Acquisitions between different procurement and payables providers have increased the number of large-scale P2P platforms available, and an increasing network of partnerships between traditional procurement providers and supplementary / adjacent solutions and services has broadened the net of procurement capabilities for providers’ clients.
  3. Expect increased adoption of eProcurement among smaller markets in the near term, enabled in part by the changes in providers’ offerings and delivery models. Overall, eProcurement adoption is being planned sooner by segments that have traditionally delayed adoption until they had the growth and resources to justify the need. One in four LMM organizations surveyed plan to adopt eProcurement software in the next 12 months, and 33% plan to adopt eProcurement software in the next 1-2 years. Enterprises on the other hand, were more likely than any other revenue segment to plan adoption in 5 years or more.

The world of procurement and supply chains is definitely evolving. What are your top procurement priorities? We'd love to hear them! Send us an email at marketing@apicsdet.org.

Looking for more information on procurement strategies?

Join us on February 6th to hear from Adient's VP of Global Commodity Procurement share his thoughts on Strategic Procurement! Learn more...

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