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The top five discussion themes for procurement leaders

Five Discussion Themes

In the next three years, procurement leaders will pivot to look “left and right” across the end-to-end value chain to enable the shift to regenerative businesses, says Kearney.

The global management consulting firm explains the economic shifts of recent years underscore a vital lesson: volatility creates significant opportunities. 

“Regenerative businesses thrive during such times, and procurement leaders have a unique chance to guide businesses through this transformative shift in the coming years,” it says.

“They hold a unique position with substantial control and oversight, allowing them to identify opportunities and drive changes across the entire value chain. 

“This positions them to set the pace for meaningful transformation with a regenerative mindset of giving more than we take.”

Kearney Australia’s strategic operations and transformation leadership team met with 20+ business leaders across Sydney and Melbourne to determine the key priorities for procurement leaders over the next three years, in enabling the shift to regenerative business. 

Five significant takeaways emerged (directly published courtesy of Kearney):

1. An orchestrator of sustainable value beyond cost across the E2E value chain

Procurement organisations, beyond traditional responsibilities like cost reduction and inflation management, now operate with a broader and more commercially focused approach. 

Emphasising technology, new capabilities and alternative pricing models (e.g. back-to-back contracts), they ensure the business takes a proactive stance, staying ahead of market dynamics to capture opportunities and mitigate risks effectively.

However, in a period of rapid change, corporate Australia is not accustomed to “backing winners” when it comes to emerging technology, new suppliers and enabling new markets/supply chains. 

Procurement must step up by facilitating E2E value chain and ecosystem orchestration, and bring supplier-led innovation to enable businesses to access new capabilities with minimised commercial or operational risk.

Many leaders now see procurement as a key enabler in a collaborative ecosystem for regenerative business, involving government, investors, communities, start-ups and established players.

2. Procurement is critical to the ESG agenda

While sustainability and ESG remain high priorities, many face challenges in auditing their supply chain beyond surveys, especially regarding issues like modern slavery and Scope 3 and being able to tangibly demonstrate compliance. 

The hurdles include reporting difficulties, genuine transparency and a lack of resources or data for addressing identified problems.

In Australia, leaders are proactively enhancing ESG capabilities within procurement teams, understanding procurement is key to influencing the overall sustainability agenda beyond de-carbonisation. 

Procurement strives to generate positive change benefiting both people and places with a strong focus on ethical labour, DEI, human rights, ensuring local industry participation, and enabling circular business models.

As procurement integrates sustainability capabilities within its teams, its role has evolved to provide business options across cost, ESG, diversity and resilience. Positioned at the forefront, procurement informs strategic choices, contributing to a stronger, strategically-aligned business.

3. Moving from reactive to regenerative to be future ready

Australia, whether as a manufacturer or a consumption market, operates within a hyper-connected global supply chain, facing numerous geo-logistical, trade, climate and macro-exposures. 

As highlighted by one participant, any escalation of tensions in the South China Sea could prompt a swift need for dual supply strategies.

Another participant emphasised the importance of localisation and re-shoring critical capabilities, viewing procurement’s role as proactively safeguarding Australian sovereignty. This entails not only managing risks but also providing ongoing assurance, signalling a shift from a reactive stance to a more regenerative approach.

Given the rising frequency of unexpected events globally, traceability across all tiers (1 to 1-n) of the supply chain is crucial. Companies have moved from a ‘just in time’ to an ‘ahead of time’ model in response to Black Swan events. 

In this context, procurement must adopt a data and insight-driven, scenarios-based approach to ensure the organisation is ‘future ready’ not ‘future proof’.

4. Next-gen skills and creating supply market capability can enable broader strategy

In the current post-COVID talent shortage in Australia, procurement leaders are seeking professionals with a broader skillset beyond category knowledge. 

Desired skills include problem-solving, data science, analytics, ESG, Generative AI, design to value, UX, sales and commercial acumen to capture value beyond cost and drive E2E efficiency.

To address challenges, a shift from traditional RFP-focused skills is advocated, exploring innovative alternatives such as marketplaces. There’s a call to challenge the entire procurement operating model, moving towards a more CoE/agile/scrum approach aligned with business needs. 

Some participants highlighted the increasing prevalence of talent sharing across the ecosystem to address capacity and capability gaps. Additionally, recognising a shortage in supply market capability, procurement’s impact on the organisation’s growth agenda is hindered. 

Procurement is playing a stronger role in driving supply market capacity expansion that is aligned with broader corporate strategy.

5. Fundamentals of data and analytics are still critical

Procurement teams in ANZ are actively exploring digital, AI/ML initiatives. Although initial pilots show promise, the broader adoption of AI/ML is hindered by the smaller scale of procurement functions in the region. 

Notably, success has been demonstrated in specific stages of the procurement life cycle, such as supplier risk assessment, RFx evaluations and transactional process automation.

In response to the hyperconnected landscape, procurement leaders are prioritising foundational investments in robust data and analytics to unlock life cycle value. This strategic approach is accompanied by a diligent focus on managing challenges associated with privacy, cybersecurity and confidentiality concerns.

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