The Hackett Group

Building an Agile Procurement Organization

There’s no such thing as too agile. In this report, The Hackett Group reveals procurement strategies for businesses seeking to move their procurement tools to the cloud and develop procurement technology success and expertise. The report shows how procurement automation is becoming crucial for saving costs, minimizing risk, and creating flexibility to deal with disruption.

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Read this report to see how by making certain improvements to their procurement processes, businesses can ultimately:

  • Prepare for supply chain disruption and external risk
  • Switch to back-up suppliers swiftly and efficiently
  • Transition procurement team members to new roles

     

One discovery of the Hackett Group’s recent survey on agility in procurement was that all procurement organizations recognize the need to improve agility and flexibility in their processes, starting with consolidating business applications (e.g., the use of source-to-settle suites), moving applications to the cloud, and developing technology expertise within the function.

In terms of promoting procurement agility, the highest ranking service design best practices are establishing end-to-end value-stream process design and utilizing customer-centric design tools and methods. By implementing these changes, procurement teams aim to increase their flexibility when facing external disruptions (competitive, geopolitical, regulatory or otherwise), which in turn increases their value to the company.

With new e-procurement technology and service design practices, procurement leaders can prepare their organizations for any eventuality. Discover which practices are most effective to help your procurement organization cope with uncertainty and pave a path to success in procurement optimization.

When processes are designed around value streams and stakeholder needs (rather than simply to maximize efficiency and reduce costs), organizations are able to alter service design more quickly. When technology is cloud-based and applications are consolidated, rapid change is considerably easier to execute and manage.
Laura Gibbons and Christopher Sawchuk, The Hackett Group

FAQ

What did The Hackett Group’s survey of procurement executives reveal regarding their top 10 priorities?

The first priority is to elevate the role of procurement to a trusted advisor to the business. Secondly, they aimed to reduce purchase costs. Third, procurement leaders wanted to increase internal stakeholder satisfaction. Fourth, their goal was to improve the business agility of the procurement function. Fifth and sixth, they sought to enhance operational process efficiency and deepen the influence of procurement on complex spend categories to drive value beyond sourcing. Seventh, procurement experts prioritized an expansion of purchasing’s scope and influence. Eighth, they sought to reduce supply risk in order to ensure supply continuity. Ninth and tenth, procurement leaders wanted to reduce supply risk in order to avoid regulatory non-compliance, and to increase the level of supplier collaboration. For more detail, download the Hackett Group white paper.

What are the main ways that technology increases procurement’s agility?

Technology allows procurement to consolidate business applications, such as by using source-to-settle suites. In addition, technology that is migrated to the cloud allows procurement to be more flexible, scalable, and accessible by stakeholders. Further, procurement staff who can function independently of the IT organization will facilitate a more agile procurement team, so it is crucial to identify technological tools that are user-centric and that adapt to user’s needs.

What are various procurement technologies and how do they impact agility in procurement?

First, the B2B, or many-to-many marketplace, technology facilitates the ability to quickly identify, vet, and replace suppliers. Second, SIM and market intelligence provide comprehensive information on supply sources and performance, which makes it easier, for example, to redflag suppliers and get ahead of supply chain disruptions. Third, artificial intelligence (AI) and robotic process automation (RPA) can be applied to automated processes to ensure fast decision-making and to ensure accuracy of supplier onboarding data. Fourth, the Internet of Things (IoT) connects physical devices in real time to improve the visibility of inventory, logistics, and lead-time data, for just-in-time ordering, an important aspect of direct procurement. Advanced analytics will also increase the visibility of crucial information, especially supply/demand and supplier performance. For more detail, download the Hackett Group white paper.