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Opinion: Is the procurement sector going through an identity crisis?

Identity Crisis

In this article for PASA, Silvério Governo, New Zealand Country Manager & Head of Sales, Australia & New Zealand at Portt, an Advanced Company explores the concept of procurement’s identity crisis.


The world of procurement has always been centred around processes, compliance and cost control. It’s a discipline where meticulous planning and execution have traditionally reigned supreme.

Times are now changing and the procurement sector is undergoing a transformation that begs the question: are procurement professionals going through an identity crisis? 

In the past, procurement teams were seen as cost centres, responsible for managing transactions and keeping the financial ship afloat. However, as technology and industries continue to evolve, organisations are recognising the need to adapt and overlay new tools that automate procurement processes. 

This shift is fundamentally altering the role of procurement within many organisations and is challenging its very identity.  

Our recent report Future-Focused Procurement – Forging Ahead in ANZ revealed that procurement professionals throughout Australia and New Zealand recognise that their role has become increasingly strategic and much less process driven. 

The traditional procurement paradigm


For years, procurement professionals have prided themselves on their ability to navigate intricate processes, manage suppliers and secure cost savings. 

They were the gatekeepers of financial prudence, tasked with ensuring every dollar spent was accounted for and every supplier relationship was optimised. 

Over the past few years, it has become apparent that there are differences around the specific role the procurement function plays in each organisation. 

However, many have now recognised the benefits of a strong strategic and operational procurement function and the value and impact a functioning and effective procurement department can have on a business. 

Effective procurement only happens when there is executive and leadership buy-in who perceive it as a vital strategic function within the business. 

Whilst achieving cost savings is still a key objective of most procurement functions, those that have moved away from a servicing role to a more strategic one have done so once they have overcome certain barriers. 

As the saying goes, ‘the only constant is change’ and the procurement sector is no exception. 

In an era of digital transformation, automation and data-driven decision-making, the procurement landscape is shifting dramatically and is becoming significantly more strategic to their organisations. 

The procurement identity crisis


The identity crisis in procurement arises from the clash between tradition and innovation. 

As organisations increasingly rely on technology to streamline procurement processes, many of these processes are now being automated. This shift raises fundamental questions about the role of procurement in the modern business landscape. 

As procurement evolves and matures, some procurement teams are still operating at a servicing capability. 

However, a transformative vision for the future of procurement requires tipping the balance towards a more strategic capability and there are some challenges to be overcome before the perception can shift. 

The transformative vision of strategic procurement 


The future of procurement is about adding value beyond cost savings; it’s about becoming strategic partners in an organisation’s growth and success. 

Organisations can navigate the future of strategic procurement by implementing the following: 

1. Data-driven decision making: strategic procurement involves embracing data-driven decision-making by leveraging data analytics to gain insights into supplier performance, market trends and cost optimisation opportunities

 2. Supplier relationship management: building and nurturing strategic supplier relationships will be critical. Procurement teams must focus on collaboration, innovation and value creation with suppliers

3. Risk management: identifying and mitigating risks, such as supply chain disruptions and geopolitical factors, will be integral to strategic procurement

4. Sustainability and ESG: procurement teams should play a role in ensuring sustainable and socially responsible sourcing practices

5. Talent development: investing in skill development and training to equip procurement professionals with the capabilities needed for strategic thinking and decision-making

Conclusion 


The procurement sector is indeed going through an identity crisis, but it is also on the cusp of a significant transformation. 

The days of being process-driven are waning, making way for a more strategic and value-focused approach. 

To navigate this shift successfully, procurement professionals are embracing change with a forward-looking mindset and are adopting new technologies to support them. 

The perception organisational leaders have of procurement is in a transitionary phase.

Ultimately, they will become indispensable strategic partners in their organisation’s pursuit of growth, sustainability and success. 

The identity crisis will be the catalyst for a brighter and more strategic future for procurement professionals and the organisations they serve.

Portt is a regular sponsor of select PASA activities.

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