There’s good reason to be optimistic about the future of procurement in the coming year and beyond. Despite facing some downright intimidating challenges, it’s an exciting time to be in this field. Indeed, experts at the recent Art of Procurement Mastermind Live event offered a fresh look at budding procurement trends, the renaissance of procuretech and the increasingly prominent role of procurement.
Personally, I left the sessions intrigued, motivated and proud to be a part of what feels like the start of a new era in the field, led by energetic, ambitious change makers.
In this post, we’ll explore five emerging procurement trends. Specifically, we’ll focus on the future and strategies for procurement professionals to prepare for the post-pandemic ‘next normal.’
Five procurement trends to watch for in 2022
- Shifting mindsets, from the top down
- New procurement KPIs that align with big-picture goals
- An overhaul of procurement’s reputation
- Welcoming newcomers with non-traditional talents
- An emphasis on the three Cs
These trends are my key takeaways from the Mastermind Live Fall 2021 sessions. The two-day virtual event featured a variety of procurement experts who are quoted below.
Procurement trends to watch for in 2022
1. Shifting mindsets, from the top down
Generally speaking, the utilization of procurement (or lack thereof) within an organization reflects its perceived value to the c-suite. Thanks to an increasing awareness of the importance of procurement, CPOs have an opportunity to do more.
To maintain momentum, procurement leadership needs to communicate their value beyond simple cost savings. In addition, procurement can begin to influence how the c-suite views their business relationships.
“It’s a mindset shift; business partnering has to be the #1 thing you’re focused on, not savings.” – Joe Payne
The task of making an organization more internally and externally collaborative may seem overwhelming, but it makes a significant impact on customers.
“I’m massively into diversity of thinking, and I like to surround myself with people who are providing different perspectives. Diversity of thinking and input from procurement saves us time, energy, cost and makes us more effective.
Working with procurement, legal and other stakeholders for our customers makes us look better and comprehensive with a 360-degree view in the eyes of customers.” – Chet Patel
2. New procurement KPIs that align with big-picture goals
Procurement often operates in a tightly-contained business unit. Accordingly, many of their KPIs are set internally. However, as procurement becomes a strategic force in the business, the goals of the department must align more directly with overarching business objectives.
Unfortunately, it’s a challenge to create seamless alignment. As Payne explains that it’s important to recognize ‘what’s important to the business versus what’s important to procurement. On the procurement side, the biggest goal is always savings, which is generally a mis-match of priorities with the overall business, which is the wrong model and creates misaligned expectations. Fundamentally, this is the biggest gap between the two.”
Procurement leaders need to identify opportunities to contribute to growth outside of their own vertical. For example, consider engaging with other department heads to align with their goals, particularly when it comes to digital transformation.
“Don’t digitize just for the sake of digitizing, really understand the need of the business. Having three or five year plans has gone out the window, the key now is understanding current objectives.” – Diarmuid O’Donoghue
In addition, procurement can affect top-line growth by facilitating the spend that supports overarching brand initiatives. Axel Tigges touches on this saying, “What is very important is the key areas this procurement team can impact for the larger business is sustainability and digital transformation.”
3. An overhaul of procurement’s reputation
The perception of procurement within a business may range from the keeper of the purse strings to a roadblock. Unsurprisingly, this view needs to be overhauled with executives and stakeholders alike.
“Procurement has a perception issue. Twenty years ago, it was on the business and executive level to understand what procurement looks like, today it’s on us to send the message of what good procurement is and how we should align to the business and what it will produce in addition to cost savings.
Best-in-class procurement functions are involved in the budget conversations and in planning for the future. But because of the history of procurement being reactive and tactical, not many executives have that perception of procurement.” – Joe Payne
It’s procurement’s responsibility to build positive internal relationships, earn a seat at the table and influence future decision making. Consider how you can turn stakeholders into procurement advocates. For example, proactively share supplier and spend data that will help them meet or exceed their growth goals. As Phil Ideson put it, “Early involvement with procurement in the decision making process with buying is kind of like the holy grail.”
How to prevent perception issues:
- Work across business silos to not only provide useful data, but also to gather the market intelligence needed to inform category strategies.
“There’s different ways to build business connections. Take a key role of being a connector. Establish a culture that is business-centric and what the consumer is looking for. Be tech savvy and have access to market intelligence. Formal networking is important to drive your agenda.” – Kathy Ruhle
- Empower department leaders to source their own categories with self-service tools, established processes and spend guardrails.
“We have to find other ways to get the work completed, either with automation software or in partnership with other departments on transactional and repetitive sourcing processes. To enable growth in an organization, we have to find advantages in the data we have in the supply sources.” – Chris Sawchuck
4. Welcoming newcomers with non-traditional talents
As procurement evolves, so too does the professional profile. Consequently, many procurement teams are prioritizing non-traditional soft skills alongside hard skills.
“The skill-set in procurement is shifting, and we’ve been hiring for the right mindset to work with stakeholders in addition to practical procurement expertise.” – Chet Patel
The profile of the perfect procurement hire varies, but communication, strategic thinking and having digital mindset are commonly on the list. As a new generation of procurement professionals enter the workforce, it’s crucial to find a balance with veteran practitioners.
“You must have a digital mindset and fight for young talent that have that innate ability. But, also help guide the senior level and experienced teammates so that you can combine both for better outcomes.” – Axel Tigges
Ruhle, Patel, Addicoat and Tigges offered their top profiles:
- Fast learners
- Clear communicators
- Strategic thinkers
- Digital natives
- People persons
Along with their favorite skills, expertise and traits:
- Broad business knowledge
- Sales-specific knowledge
5. An emphasis on the three Cs
Compliance. Conviction. Courage.
Expect to see these three themes return as procurement trends in 2022 emerge. It’s important to recognize the difference between compliance and conviction in procurement — and find a balance between the two.
Lead procurement efforts with conviction, not compliance alone. Demanding that stakeholders blindly follow rules doesn’t foster a collaborative, productive relationship.
Procurement professionals understand that sourcing and RFP processes exist to protect the business. Consequently, it’s important to convey how processes ensure the growth and success of the organization. Indeed, sometimes it’s necessary to go the extra mile to draw others in, but the investment will pay dividends.”
Finally, take courage. The speed of change in procurement can result in whiplash. Truly, change has been a constant over the last two years. But, this means there is an opportunity now to gather momentum and shape the future.
Innovation doesn’t come easy, but it’s worth it. As Diarmuid O’Donaghue says, “We work with startups, sharing a problem and goals, testing fast, failing fast, and not being afraid to fail, is how we encourage innovation with our suppliers.”
So, what does the future hold?
While these 2022 procurement trends are merely my predictions, they are based on the insights and observations of many. Additionally, it’s worth mentioning that technology continues to be an overarching theme in nearly every discussion of the future of procurement.
As the technology landscape expands, procurement teams are building their own stacks of solutions. From RFP management software to vendor experience platforms, organizations are increasingly selecting best-of-breed tools to serve their unique needs. However, it’s important to remember that buying technology isn’t the solution in and of itself.
“There’s a small number of procurement leaders that are charging their own path digitally and aren’t afraid of the technology. There’s no magic button in technology, everyone has to roll up their sleeves and get dirty.” – Dr. Elouise Epstein
Finally, when facing challenges in the coming year and beyond, remember to stay agile, leverage available resources and lean on a network of peers. As Addicoat puts it, “In adversity comes opportunity. Think dynamically and look for where there’s opportunity.”
Special thanks to Phil Ideson and Kelly Barner with Art of Procurement. Thank you also to each of the presenters and participants in the Mastermind Live Fall 2021 sessions that inspired these thoughts on the industry.
To explore the sessions, checkout AOP Mastermind.