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6 Ways Your Procurement Business Can Compete In The Era Of Growth

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When job and skill shortages reign in the procurement industry, your business can take these steps to alleviate the growing pains.

During Deloitte’s global CPO survey in 2016, they polled 324 senior procurement leaders representing $4.4 trillion dollars in global spend.

In an increasingly competitive global market, companies are looking more to their procurement organizations to drive out costs to enable the business to improve the bottom line and improve market standings. Currently the procurement industry is facing one of the biggest talent shortages we have seen this century.

During Deloitte’s global CPO survey in 2016, they polled 324 senior procurement leaders representing $4.4 trillion dollars in global spend. They asked questions regarding the talent gap and found that 62 percent of CPOs do not believe their team has the skills and capabilities to deliver their procurement strategy. Given the growing importance of procurement and the supply chain field, these results are particularly shocking.

5 Major Factors Affecting the Procurement Industry

  1. With the ability to outsource and automate everything from requisition to payment management, many traditional procurement roles are being removed from the equation.
    Organizations are now looking to their procurement teams to act as critical thinkers, influence business decisions in the use of third-party activities, and focus on innovation. This trend is not expected to change, as 19 percent of CPOs in the Americas plan to increase the level of outsourcing within their procurement functions over the next year.
  2. Twenty years ago, it was rare to find someone in purchasing who sought out that field as one to pursue. Although today many universities offer robust supply chain management education tracks, the number of education professionals does not yet match the requirements of the growing industry.
  3. The Deloitte survey also found that 30 percent of CPOs spent less than one percent of their operating budgets on training their current employees. With the rapidness of changes within the industry, talent should be invested in now more than ever.
  4. Digital capabilities like cognitive analytics, e-sourcing tools, supplier relationship management tools, and other unprecedented technologies are growing increasingly important for organizations to stay current and agile in the procurement industry. Eighty-two percent of CPOs say their organizations have started their digital supply chain journey. With new technology coming out every day, often the current talent is not trained or familiar with these new tools.
  5. The U.S. Bureau of Labor Statistics reported that logistics jobs are expected to grow 26 percent by 2020. Coupled with 60 million baby boomers retiring by 2025, procurement is an area being affected like many others across the U.S.

Given the talent gap at hand, organizations need to find ways to recruit and retain top-tier talent for their procurement organizations to remain competitive in the global landscape and drive their businesses forward.

In an increasingly competitive global market, companies are looking more to their procurement organizations to drive out costs to enable the business to improve the bottom line and improve market standings.

Consider Investing in These Key Areas

  1. Utilize outside training to educate talent within the organization.
    Organizations should consider getting their employees certified through reputable agencies such as the Institute For Supply Management (ISM), Council of Supply Chain Management Professionals (CSCMP), or APICS. Specialized training on negotiation skills, project management, and supplier relationship management are also readily available through university programs and training institutes.
  2. Develop a robust internal training program.
    Look to past winners of the Procurement Leaders “Learning & Development Award” such as Delphi AutomotiveRoche, and ABB Group for inspiration. Delphi, for example, promotes a culture of deep learning through Delphi University, “which offers courses in all aspects of supply chain management, [it] is a catalyst for knowledge creation and dissemination. A wide variety of courses are available to SCM employees globally, and it’s one way we instill a culture of deep learning and innovation in our teams.”
  3. Forge partnerships with leading universities for entry-level talent needs.
    Align with universities like Michigan StatePenn StateMITUniversity of Tennessee, and other universities paving the way in supply chain education. The creation of leadership and management trainee programs is not only attractive to upcoming graduates, but promotes stronger retention among new-hires and builds robust succession plans.
  4. Look outside of supply chain for talent.
    Deloitte’s study found that two-thirds of CPOs within the manufacturing industry specifically identify training their teams on technical procurement skills as a priority. Organizations should consider looking internally at commodity-specific subject matter experts and engineers to fill a technical procurement need they may have, or look to outsource their procurement through a third-party sourcing firm that has strong technical expertise in the area required.
  5. Create a strong value proposition for candidates to join their organization.
    Given the shortage of qualified talent within the industry, high-caliber candidates have the luxury of being selective. A strong value proposition could include robust employee development plans, competitive compensation and benefits, and various perks and incentives to boost morale and improve the culture.
  6. Utilize a procurement-focused recruiting organization.
    Given the talent shortage, most high-performing candidates are passive job seekers that you will not find through job postings. Using a specialized recruiting team with industry knowledge (whether internal or external) will allow you to tap into their vast networks and experience to engage with top-tier talent meeting your criteria.

While each of these six areas may come at an expense, every CPO knows the monetary value a highly talented individual can bring to a procurement organization. With increasing pressure to deliver year-over-year savings, lead time reductions, process improvements, and technology initiatives, the demand for high-caliber procurement professionals is only increasing.

While building out short- and long-term procurement strategies, organizations should factor in a strategy to retain and grow their procurement talent given the current challenging talent landscape within the industry.

Melissa Hoegener is the Co-founder and Director of Recruiting for SCOPE Recruiting, a niche recruiting firm specializing in roles across supply chain and operations nationwide. Her background as a former Global Commodity Manager and procurement professional allows her to closely align with both organizations and candidates to recruit in the competitive landscape.

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