Why Procurement is busier than ever, and what you can do about it …
December 2022 , By Jonathan Dutton FCIPS, CEO at PASA
Post-Covid, procurement teams have never been busier, PASA CEO Jonathan Dutton identifies 5 reasons why, with 5 authentic short-cuts to faster work that also maintain professional integrity: Busy Buyers
Buyers have never been busier.
A recent 2022 global survey from The Hackett Group, a global procurement research & advisory firm centred in the US, measured an average 11% increase in procurement workload globally from 2021 until 2022.
However, fully 90% of the CPO audience at The PASA CPO Exchange retreat in August 2022 insisted by vote that they have incurred a higher increase in workload than 11% - Buy why, exactly?
Some recent research suggests that there are FIVE chief reasons that we can see why workload has spiked so aggressively since Covid:
1. LESS STAFF:
During Covid many procurement teams dumped consultants and contractors and, as yet, many have not returned. Worse, teams that lost staff throughout the pandemic have found that replacing experienced staff members during an acute skills shortage has proved as difficult for procurement as it has for others.
A recent show-of-hands at a CPO roundtable confirmed 100% of those present were carrying unfilled staff vacancies. Some might also suggest less staff coming into the office to work and accessing in-house systems has affected team productivity (although, some might argue the opposite).
2. SUPPLY ASSURANCE:
The supply chain blockages around the world are forcing buyers in Australia to be more proactive and institute real strategies to ensure supply – higher stock levels, onshoring, near-shoring or re-sourcing are all handy strategies; but all take more work and far more due diligence to enact.
3. COVID CONTRACTS:
During the pandemic existing contracts were often not top priority. Some were paused, others extended, a number stopped dead and cancelled, some re-negotiated temporarily, a good few rolled-over automatically or ran on, yet others ignored. This work has come around again, and needs addressing – often all at once and, increasingly, with some urgency as cost increases come to light.
4. STRATEGIC RE- ALIGNMENT:
The widespread failure of business continuity plans as the pandemic took hold has forced organisations at the tip of the global supply chain to reassess their strategic priorities – often pivoting around COST reduction v lower RISK?
Saving a few shekels off the asking price by sourcing from low-cost countries is a normal approach. Alternatively, a safer course of sourcing from nearby suppliers offering greater certitude has often proved a very viable PLAN B to assure supply – pursuing both (or the alternate supply strategy) has driven up workload – often two jobs then, not one.
5.THE ESG FACTOR:
As one CPO complained fairly recently at the PASA CPO Roundtable, “we are just utterly overwhelmed with ESG demands currently.”
Squeezing an ever broadening list of ESG requirements into even simple purchase decisions takes much more effort. Ensuring compliance with mandatory laws – The Modern Slavery and Payment Time Reporting Act – are just the start point for ESG for the supply side. Indigenous spend quotes, buy-local policies, SME quotas, net zero targeting, renewable energy requirements, supplier diversity and social & ethical procurement efforts all take time. And as a pre-requisite for many procurements nowadays slow everything up.
Alas, the sheer volume of work is only one facet of the procurement workload equation. Complexity of work and its difficulty has also increased. Obviously, post-Covid protocols and supplier safety factors and now integral to all supply-side arrangements. So are supply chain considerations (as above).
Yet the world is also an immeasurably more complex and volatile place since the pandemic. Global uncertainty and the insidious effects of the war in the Ukraine and its ripples have driven this.
The idea that anything done professionally or well need a complex mechanical solution feels far more right today than wrong. To quote the American writer and critic Gore Vidal:
‘In life, there is always an obvious and simple answer to every problem, that is almost always wrong.’
Gore Vidal procurement, we can be a bit more specific – I often use the equation below to illustrate the point:
Source : JD Consultancy
Sure, a professional buyer will always do a competent purchasing job by applying professional knowledge, standards and process. Yet to excel, as most stakeholders now demand, you have to cognoscente of market conditions and even product knowledge. All this takes time. It also often rules out any useful short-cuts.
So, what can a busy buyer do to save time? Consider FIVE options perhaps –
How to buy any CATEGORY quickly today ….
1. The DIY option
You simply prioritise your new category above others (never easy) and deploy the first part of the equation above - and trust your in-house standards and a professional approach to buying any category in any market, It should, mostly, serve you well. Up to a point. Especially when supplemented with fast “How to…” guides, google, You Tube, and useful networks like PASA CONNECT.
For the most prevalent INDRIECT categories, you can use an aggregator. They have off-the-shelf categories for members to buy through that present acceptable industry terms, specific protections against risk, and attractive discounts farmed from other members aggregated volume. Naturally SUPPLY CLUSTERS offer around 40 of the most popular indirect contracts – and non-members are often free to browse. Other aggregators have also grown.
3. Supplement the team
Most line managers are constrained in hiring FTEs – a difficult process at the best of times within large organisations. But bringing in a temporary contractor or consultant, even a WFH freelancer post-retrenchment, to do the job for you, is often an easier answer – even for a short period of a few months. A normal recruitment process should test bona-fides and experience and a day-rate or even fixed price deal is possible and an affordable low-risk option – although the skills market is tighter than you might want currently for speedy solutions?
4. Retain a consultancy firm
Turnkey solutions in various formats are available from consultancy firms large and small. The big four firms offer trusted brands but can be pricey. Yet the ‘little three’ boutique procurement advisory firms in Australia are very credible alternatives. A plethora of smaller firms, each with a handful or so of staff, are growing fast. The one-man-bands are still around too – often with handy networks of associates to pluck from as needs dictate.
5. Utilise one category consultancy’s
The fastest growing consultancy sector is perhaps the on-category specialists. What these firms have in common is a singular specialist focus on just ONE category and that they usually have no dedicated procurement practitioners in their firm. In fact, they are often mostly all ‘poachers-turned-gamekeepers’ – that is, former sales or customer facing staff from the other side, the supply side; in fact, from the leading suppliers in their industry.
They know every trick in the book in their category, but, invaluably, how their industry really works, key benchmarks, specific compliance factors, and where the right balance of cost -v- risk -v-v service really lies. They specialise in all the major INDIRECT categories nowadays – eg: marketing services, ITC, energy, travel, legal services, print and so on …. they are great option to set up your new category strategy or first-time contract correctly, then sustain these contracts yourself in future.
The 5 real reasons why workloads are currently so high in procurement also offer 5 good ways to manage the workload and take a step forward in sophistication and relevance of your procurement effort. Why not invest some time and effort in your business case to take the plunge and segment your workload amongst qualified others? Jonathan Dutton FCIPS, is the CEO of PASA and an experienced procurement practitioner, manager, consultant and trainer, including for agile procurement through PASA AGILE. He is also a non-executive at SUPPLY CLUSTERS.