New Procurement Research Paper Issued by The Hackett Group Contains Analysis on Risk and Reward

The Hackett Group’s 2021 Procurement Key Issues research examines how CPOs are refocusing their agenda in the coming year.

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.

Among its findings:

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 (Pages 4, 5).

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 latest research from The Hackett Group on large company priorities shows 2021 is set to be a very exciting and challenging year,” says Nic Walden, Senior Research Director, The Hackett Group, who is one of the authors of their Procurement Key Issues research.

“Procurement are set to continue to offer significant contribution to the core mission of spend cost reduction and control while also enabling resilience and mitigating supply chain risk as risk rates as the no 2 priority.”

Walden told SCMR that other important priorities for procurement relate to the functions continuing efforts to transform at speed towards the goal of being a strategic business enabling function, being more agile and adopting digital technologies.

“Notably CSR, sustainability and responsible procurement make the top 10 priorities for the first time,” adds Walden.

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