Procurement Innovation Gains Traction

The Hackett Group’s study found that procurement leaders expect their budgets to decline by 0.4 percent in 2013. Procurement staff is also expected to shrink slightly, by 0.5 percent. At the same time, annual revenue growth of 6.5 percent is expected.

Reducing spend costs remains at the top of performance-related concerns in The Hackett Group’s study. But innovation has shot up in the rankings, and is now tied with spend influence as the number two priority.

Managing supply risk has increased significantly in priority as a means of profit protection, with supplier compliance receiving particular attention. The emphasis here is on efficient management of cross-functional workflows relating to regulatory requirements and supplier compliance with performance expectations. To accomplish this, companies are focusing on a combination of process improvement, master data management, analytics, measurement systems and more.

The Hackett Group’s research also recommends that as companies move from episodic sourcing activity to a life cycle-based category management approach, new capabilities must be built, including broader supplier relationship management (SRM), deeper supplier/market intelligence (and associated analytics), and the way in which these knowledge-based processes can be delivered as services in a scalable way. The goal should be to set up a “one-to-many” approach through a Center of Excellence serving both procurement and its stakeholders.

More details on The Hackett Group’s research is contained in the full Procurement Key Issues Research Insight, which is available at no cost (registration required) at http://www.thehackettgroup.com/research/2013/key2013prex/.

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