How Is The 2020 Crisis Shaping The 2021 Procurement Agenda?
The Hackett Group’s 2021 Procurement Key Issues research looks at how CPOs are refocusing their agenda in the coming year.
The full research piece can be found at this link. Some of the key highlights are listed below.
Continued Instability Expected
41% of survey respondents expect business conditions will stabilize by Q2 2021, but 36% believe it will take longer.
Spend Cost Reduction Back at the Top of the CPO Agenda
Business disruption has driven procurement to refocus on supporting critical business operations and supplier relationships, resulting in a pivot towards spend cost reduction (including capturing non-price value from supplier relationships) as the top procurement priority for 2021. Continuing to further strengthen procurement’s role as a strategic business enabler and delivering in an agile way are further important priorities. Corporate sustainability also made the top 10 list for the first time, in the 9th spot, representing a broader focus on corporate social responsibility.
Supply Chain Risk Reduction a Major Priority
Supply assurance became a board-level issue in 2020, and reducing supply risk to maintain supply continuity is Priority 2 for procurement in 2021, our research found. Procurement leaders are tasked with strengthening third-party risk management, monitoring a broader set of risk exposures at earlier stages of the supplier life cycle, and continuing to monitor and mitigate risks. Maximizing visibility and timeless are key here, requiring proper digital tools and the ability to leverage market intelligence data from multiple internal and external sources.
Increased Focus on Improving Analytics & Modeling
Procurement leaders are projecting significant growth in adoption of tools for data visualization and advanced analytics and modeling tools in 2021 (26% and 25%, respectively). But among the top procurement issues, this area was designated as having the lowest ability to address. Developing modern analytical capabilities is a complex process. Setting up a strong master data management program is the first – and one of the most critical – steps. Without access to extensive, trustworthy data, little can be gleaned from its analysis. Developing analytical skills is also essential for strategic decisions, predictive insights, and agile behavior.
Accelerated Digital Transformation
The crisis has pushed procurement beyond its hesitancy to adopt new tools. Procurement is rapidly shifting to adopt modern cloud-based systems, with spend suites and best of breed solutions expected to grow significantly (by 29% and 22%, respectively) and it must now scale up these technologies. Adoption of advanced emerging technologies in procurement remain constrained, with both virtual assistants and cognitive computing/AI only expected to see an 11% growth rate, with few large-scale deployments. But procurement’s success will depend, in large part, on broader implementation and adoption of modern enabling tools.
Dramatic Shift in Enterprise Priorities Towards Digital Transformation
Enterprise digital transformation rose five spots to become the top enterprise initiative for 2021, followed by a focus on diversity and inclusion programs, which rose by seven spots.
The Hackett Group’s 2021 Key Issues research is based on results gathered from more than 300 executives in finance, HR, IT, procurement, supply chain, and global business services at a global set of midsized and large enterprises.
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