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June 2013

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Latest Hackett Survey Sees a Year of Upheaval for Procurement Professionals

2013 will see significant changes in priorities and initiatives among procurement professionals as they balance the needs of their enterprises with efforts to add capabilities for long-term procurement success. In response, procurement managers will expand their organization’s spend influence via supplier relationship management, sourcing, and category management.

These findings are part of the new report, “2013 Procurement Key Issues: Going Deeper and Broader to Deliver Borderless Procurement Services,” by the Hackett Group. The authors say that compared to similar studies over the last five years, 2013 is registering the greatest year-over-year changes in priorities for both procurement performance and capability issues.

Three Important Priorities
The survey found that procurement professionals are focusing their attention in three key areas.

  • Cost reduction. Controlling expenses is always a high priority, but with 90 percent of the respondents now placing this at the top of their performance concerns, the Hackett analysts say this “clearly shows that, for better or worse, cost reduction is king” in 2013.
  • Technology innovation. Innovation has shot up significantly in the priority rankings and is now tied with spend influence for second among procurement professionals. Sixty-five percent of the survey participants said pursuing game-changing innovation and technology is a top procurement initiative.
  • Managing supply risk. This area registered a sharp rise in importance because of its role in protecting profits, Hackett says. Supplier compliance with performance milestones and regulatory requirements is receiving particular attention, with an emphasis on efficient management of cross-functional workflows. “These processes create headaches for suppliers and buyers alike, and can detract from strategic value creation when participants are bogged down in processing paper and spreadsheets,” the report explains.

Action Items
To address these areas, procurement departments will need to add new capabilities for broadening supplier relationship management, obtain and analyze detailed supplier and market intelligence, and deliver knowledge-based processes in a scalable way, according to Hackett.

One answer is to establish a center of excellence (CoE) serving both procurement and its stakeholders. For example, for supply market intelligence, a CoE would address multiple objectives, such as reducing risk, speeding up sourcing, improving negotiations, supporting entries into new markets, and developing competitive intelligence scenarios, Hackett says.

For more insights into the current state of the procurement industry, download the full report, “2013 Procurement Key Issues: Going Deeper and Broader to Deliver Borderless Procurement Services” and watch a Webcast featuring Global Procurement Advisory Practice Leader for The Hackett Group, Chis Sawchuk, and Managing Supervisor of Supply Chain Processes and Systems for Ameren, Chris Nelms.

Get details about Oracle’s solutions for supplier relationship management and its entire portfolio of procurement applications.

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