Are efficiency, collaboration and transparency the keys to procurement success in 2025? This is the central question that PASA will be posing throughout its content program this year.
Are these the three principal challenges facing procurement leaders in 2025, throughout Australia & New Zealand? What are the common factors within these three challenges that we will need to navigate to succeed for our stakeholders and ourselves?
The PASA theme for 2024 was “Responsible Procurement” and how we balance the growing demands for stronger ESG inputs (and outcomes) with a clear commercial agenda, to assure delivery in a volatile world and still ensure value for money in an inflationary environment.
The key to success in 2024 centred around prioritisation and having the confidence to hold mature discussions with stakeholders, asking “What’s first, then?” and “What’s key?” not, “How can we justify resources to address a very broad ESG agenda?”
For 2025, clues seem to be emerging to help busy buyers, such as becoming more efficient and streamlined, working more as a team with stakeholders, suppliers and each other, and operating with much greater transparency and oversight as “the norm” – especially as we work to deliver results from our ESG programs.
Efficiency – faster process, faster technology, faster service
Standing alone, efficiency as a goal has offered a weak business case for procurement to achieve more resources.
Gartner revealed their ANZ-based research in early 2023, suggesting that only 17 percent of eProcurement business cases presented by procurement succeed yet 49 percent fail. These often seemed to put efficiency as the strategic driver for eProcurement investment – over solving business problems, enacting policy, building competitiveness or driving margin. Decision makers perhaps did not agree.
The Hackett Group Key Issues Survey put technology at the heart of procurement investment needs for the last two years (in 2023 and 2024), to “close the productivity gap” between high workload growth (around 8-11 percent per annum) and headcount increases in procurement (FTE growth only at around 2-3 percent) – but we are poor at making the case, it seems, in procurement.
However, efficiency can bring its own reward; effectiveness. Being more efficient frees time. It’s time for procurement leaders to work more proactively and strategically for greater business effect, but technology is not the only thing that can bring efficiency:
- Better processes in the first place, even user self-service or guided buying
- Outsourcing procurement to aggregators, category specialists or contract staff
- Deploying agile or accelerated procurement methodology can streamline workload and responsiveness
- Improved teamwork with stakeholders and suppliers alike can also offer dividends
With all that said, technology is still presenting challenges. How does generative AI fit for procurement? For suppliers? Should technology offer augmentation over automation? What can’t technology achieve?
Collaboration – with stakeholders, with suppliers, with other buyers
Traditionally, despite its collegiate culture, procurement has often been perceived as a relatively poor collaborator.
Perhaps, having worked so hard to achieve meaningful spend control, buyers are fearful of giving it up or even sharing that control. However, teamwork with stakeholders, suppliers or even other buyers can yield strong results.
Procurement managers have made great strides with stakeholders in recent years, in many areas, becoming business partners over mere supplier conduits. Procurement has generally been involved much earlier, generated broader value, become more aligned with business goals and has built the talent to deliver.
With suppliers, after COVID-19 especially, supplier relationship management (SRM) has entered the mainstream procurement toolbox. So, how can we improve our business case for SRM, post-COVID? How can we use it as a strategy to deliver broader value?
Working together more seems obvious. Indeed, many are, such as industry sector-driven co-operative groups like Australian University Procurement Network (AUPN), Energy Procurement Supply Association (EPSA) and others, but public sector All of Government (AoG) arrangements are genuinely rare. Very rare inter-jurisdictionally. Why is that?
Transparency – better ESG, better measures, better governance
Today, transparency is no less than stakeholders expect. They want strong provenance – an understanding of where things came from and how they got here. No longer can procurement deliver three bids and a cloud of dust and produce a shiny new supplier.
Inherent in transparency is the idea of accountability, which means better measures and better governance. Overall, better service with better standards for stakeholders and suppliers, but also their suppliers and theirs.
Driving visibility up the supply chain is key. This, almost in itself, can bring better ESG outcomes, yet we cannot dodge the need to prioritise. The breadth of the ESG agenda demands prioritisation, even hard choices for some.
Transparency offers a real business benefit beyond stakeholder confidence; risk management.
We can manage what we can see.
Every conference and event run by PASA this year will offer insights from hard working practitioners and others who have faced the same problems and found their own solutions through better efficiency, collaboration and transparency. Attending any PASA event in 2025 will help you draw upon their successes to inspire your own.
