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Procurement shifts focus from cost savings to creating value

The traditional role of procurement is becoming outdated as many areas of purchasing are being automated. A need for a totally new kind of procurement specialist, equipped with strategic skills set, is emerging. Many procurement departments feel that they are currently lacking these kind of strategic skills.

According to The Deloitte Global Chief Procurement Officer Survey 2017, 60% of procurement managers experience that their departments are missing sufficient skills to deliver a procurement strategy. There is therefore an imminent need to close this knowledge gap.

Traditionally, procurement has been known as the department buying and processing goods and services. The main tasks of a procurement department have been:

1. Finding the best price and desired quality for goods and services to be delivered at a certain time frame.
2. Removing slow, paper consuming processes and reducing costs by increasing automation.

Both of these tasks have had the same goal: to lower the company’s costs. However, as technology becomes easier, cheaper and more powerful, routine tasks and processes for procurement are increasingly automated. This of course leaves buyers and procurement specialists with more time to focus on strategic tasks.

Therefore the procurement departments are now able to shift focus from cost savings to creating value. But in order to succeed, procurement departments need to increase their ability to make fact-based analysis (preferably in real-time) that management teams and other departments can utilise in their decision making.

It is also crucial that the procurement departments keep up with the latest developments in technology and utilise new tools and systems in order to work smarter and more proactively. Procurement departments should also establish closer collaboration with other departments, making sure that they can provide strategic support for the business.

The future procurement departments have to ensure that they have the correct skills set in place. It is therefore important to take a closer look at the current situation in your procurement department and build a sustainable long-term strategy: Identify and define the processes that can be automated, and which are the types of skills that are needed.

The risk is that the procurement departments not making the analysis now are likely to become redundant in the future.

This translated article was written in Swedish by Matti Bjerking, Global Support Services at Palette Software. The Swedish version was published in Intelligent Logistik on June 19th 2017.

Print or share Publish date: 2017-06-27